Welcome to this week’s plan. Inside, you’ll find a quick review of last week’s price action, key economic events, market structure, context for the week ahead, and the levels I’ll be focusing on. Let’s get prepared.
Contents
Last Week in Review
Economic & Earnings Calendar
Market Structure
Contextual Analysis & Plan
Key Levels of Interest
Last Week in Review
Last week’s plan:
Weekly Levels in Review
Last week kicked off with weakness on Monday after sellers stepped in and defended Monday’s intraday pivot at 7705 (Smashlevel) (see Figure 1). Sellers attempted to break the prior week’s low at 7659, but aggressive selling was absorbed by passive buyers, preventing sellers from moving price lower effectively (see Figure 2). This ultimately resulted in a Look Below and Fail (LBAF).
Both Tuesday and Wednesday printed higher highs and higher lows, with each session forming an excess low. The NVDA earnings report following Wednesday’s close triggered strength after-hours; however, the market remained in balance, forming a 5-day balance area heading into Thursday.
The key question heading into Thursday was whether buyers could sustain the after-hours strength and target a traverse of the prior week’s value area toward 7746. The key level to defend was 7705 (Smashlevel), where sellers stepped in early on Monday.
Buyers defended 7705, resulting in a breakout from the multi-day balance, filling the bear gap at 7720.75 and completing a traverse of the prior week’s value area in the process (see Figure 3).
As always, when the auction attempts to transition from balance to imbalance, our job is to monitor for continuation—or lack thereof. On Friday, buyers made an attempt at continuation, filling the second bear gap at 7766.25 in the process. However, the afternoon session was marked by weakness, resulting in a close at the session lows. The daily one-time framing higher remains intact despite the weak close, as Thursday’s low was not breached.
The weekly profile formed a double distribution, with a low volume node at 7711 separating the two distributions. The most traded price by volume (VPOC) for the week remained in the lower distribution, failing to migrate higher. The question now is whether buyers can build acceptance in the upper distribution or whether failure to do so would trigger a move back into the lower distribution. Early-week value development relative to the LVN at 7711 will be key to monitor.
Note that the past two weeks have formed a poor/week low, with three daily lows closely clustered together at 7659, 7655, and 7663. That said, one possibility is that Thursday and Friday’s strength was driven by short covering rather than stronger buyers. The move may simply have been a technical fill of structure, filling both bear gaps and attracting stronger sellers at better trade locations ahead of a potential downside continuation. If that is the case, stronger sellers should have no problem rotating back into last week’s lower distribution and attacking these poor lows, making the LVN at 7711 a key in the short-term.
From a buyer’s perspective, it would have been preferable to see a multi-day balance breakdown last week instead, filling the bull gap at 7637.75 and forming an excess low that could potentially trigger a reversal. Now that both bear gaps have been filled instead, the conditions are a bit trickier.
As we’ve previously discussed, the broader structure remains bullish as long as the multi-week balance breakout remains intact.
Economic & Earnings Calendar
Eastern Standard Time
Earnings Whispers
Market Structure
🟩 Daily: OTFU | Ends at: 7711.75
🟨 Weekly: BALANCE | 3W | High: 7838.50 / Low: 7655
🟩 Monthly: OTFU | Ends at: 7345.75
Balance: A market condition where price consolidates within a defined range, reflecting indecision as the market awaits more market-generated information. We apply balance guidelines, favoring fade trades at range extremes (highs/lows) and preparing for breakout setups if balance resolves.
One-Time Framing Up (OTFU): A market condition where each subsequent bar forms a higher low, signaling a strong upward trend.
One-Time Framing Down (OTFD): A market condition where each subsequent bar forms a lower high, signaling a strong downward trend.
Contextual Analysis & Plan
For this week, the main focus will be on whether buyers can sustain the multi-week balance breakout initiated on Thursday, which led to the formation of a double distribution on the weekly profile. Immediate attention is on the low volume node (LVN) at 7711, separating the two distributions.
If we open with weakness, the key for buyers will be to defend the LVN at 7711, which aligns with the Weekly VWAP at 7709. Failure to defend this area, effectively rejecting Thursday’s breakout, would be short-term bearish and once again bring the bull gap at 7637.75 into play.
If we open with strength, the key for sellers will be to defend Thursday’s high at 7755, a level above which buyers failed to gain acceptance on Friday. Failure to defend this area would set the stage for a revisit of the all-time highs.
The broader structure remains bullish as long as the multi-week balance breakout remains intact.
The weekly Smashlevel is 7711, a low volume node (LVN). Holding above 7711 would be short-term bullish, targeting Thursday’s high at 7755. Acceptance above 7755 would signal strength and open the door for bullish continuation toward the resistance area between 7825 and the Weekly Extreme High at 7855, where responsive sellers can be expected.
This resistance area will be crucial for sellers to defend, as failure to do so would shift the weekly timeframe back to one-time framing higher.
Break and hold below 7711 would be short-term bearish, targeting the support area between 7660 and the unfilled bull gap at 7637. Acceptance below 7637, indicating a failed multi-week balance breakout, would signal weakness and open the door for bearish continuation toward the support area between 7570 and the Weekly Extreme Low at 7540, where responsive buyers can be expected.
This support area coincides with the weekly bull gap at 7541 and will be crucial for buyers to defend. Failure to do so would open the door to a return to the HVN at 7440, the long-term value (90D VPOC).
Visual Representation
Key Levels of Interest
In the upcoming week, I will closely observe the behavior around 7711.
Holding above 7711 would target 7755 / 7825 / 7855* / 7895 / 7935
Break and hold below 7711 would target 7660-37 / 7570 / 7540* / 7485 / 7440
*Weekly Extremes (defined by proprietary models). I exercise caution when initiating trades outside the Weekly Extremes to avoid impulsive decisions at unfavorable locations. Essentially, the Weekly Extremes act as a safeguard against emotionally-driven trades, which is far from ideal for making well-informed decisions.
As usual, a detailed Daily Plan will be posted tomorrow. Hope you all enjoy the rest of the weekend!
What times are your volume profile anchored to?
Thank you Smash!