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The yellow levels highlighted at the bottom left of the chart are the primary intraday levels I focus on. To avoid impulsive decisions at poor trade locations, I follow a simple but effective rule: exercise caution when initiating trades outside of these yellow levels.
This means I’m cautious about chasing longs above the Final Upside Target (FUT) and shorts below the Final Downside Target (FDT). It’s important to understand that not chasing does not imply initiating a trade in the opposite direction. Discipline over impulse.
Be sure to review the Weekly Plan for a broader perspective, key levels, and market expectations for the week ahead.
Contextual Analysis & Plan
Wednesday’s main distribution, ranging from 7670 (Smashlevel) to 7691 (UT1), was our key focus today, and the overnight session traded almost perfectly within this range. Attempts to break out of this range were met with responsive activity, providing good trading opportunities, particularly during the European session (see Figure 1). The tone shift came about an hour before RTH opened, as buyers initiated a breakout above 7691 and subsequently defended the level on the retest.
While 7691–7670 was of short-term interest, the high volume area between 7711 and 7655 was key. As discussed, acceptance outside this range would open the door to a directional move. The RTH session opened with a true gap up, and buyers took control of the opening level. Note the limited trading activity below today’s open (A-period highlighted in green). Sellers were unable to fill today’s gap during the initial three periods, from A- through C-period, and notably, no 30-minute bar saw a close below the 7711 level.
The C-period looked below the Initial Balance low and failed, triggering a vicious reversal that was primarily driven by headlines. The aggressive seller below the IBL wasn’t too happy about that (see Figure 2). The squeeze left behind a large set of single prints in the D-period, separating today’s double distribution. Upside momentum stalled in the afternoon as the market consolidated its gains.
Session Recap
Today’s session established a double distribution trend day after buyers defended the key 7670 level overnight and sustained a true gap higher. In the process, a large set of single prints formed in the D-period, separating the two distributions.
The highlighted upper distribution between 7766 and 7747 is the short-term focus. A breakout would target last month’s VAH, while a breakdown would open the door to filling today’s single prints. Acceptance into today’s lower distribution would be a sign of weakness. NFP is on deck tomorrow.
In terms of levels, the Smashlevel is at 7747, the lower end of today’s upper distribution. Holding above 7747 signals stability and targets today’s high at 7766 (UT1). Acceptance above 7766 would signal intraday strength, targeting the daily NVPOC at 7794 (UT2), with 7814 (FUT) serving as the final upside target under sustained buying pressure.
On the flip side, failure to hold 7747 shifts focus to today’s breakout single prints at 7726 (DT1), with 7691 (FDT), the unfilled bull gap, serving as the final downside target under sustained selling pressure.
Visual Representation
Levels of Interest
Going into tomorrow’s session, I’ll closely observe the behavior around 7747.
Holding above 7747 would target 7766 / 7794 / 7814
Break and hold below 7747 would target 7726 / 7691
Additionally, pay attention to the following VIX levels: 15.06 and 13.58. These levels can provide confirmation of strength or weakness.
Break and hold above 7814 with VIX below 13.58 would confirm strength.
Break and hold below 7691 with VIX above 15.06 would confirm weakness.
Overall, it's important to exercise caution when trading outside of the highlighted yellow levels. A non-cooperative VIX may suggest possible reversals i.e trade setups.
Great insight
Thanks smash