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:
Last week kicked off with strength on Monday, with buyers defending the intraday Smashlevel at 7764 overnight before initiating buying emerged above the Weekly Smashlevel at 7783 during RTH (see Figure 1). Reclaiming 7783 was short-term bullish, opening the door to a retest of the ATH at 7848, as outlined in last week’s plan.
“If we open with strength, the key for sellers will be to defend Friday’s afternoon rally high at 7783, which closely aligns with last week’s VAH (7782). Failure to defend this area would set the stage for a revisit of the multi-week balance high at 7848, while SPX and SPY challenge their respective ATHs.”
The reclaim provided a beautiful continuation setup, with value building above the level and a trap forming below before the auction continued higher. Notable buying was also visible on the tape pre-open (see Figure 2).
Monday’s directional move away from value was followed by a true gap higher on Tuesday, with the auction printing a new ATH at 7897.50 in the process. The key reference for the remainder of the week was the prior ATH at 7848, which aligned with Tuesday’s true gap.
Wednesday’s session was quite interesting, opening with a true gap down that put an island reversal pattern in play for sellers, with Tuesday’s session forming the island. However, sellers were ultimately unable to take advantage of this pattern, as the session closed back above the prior ATH at 7848 (see Figure 3). Stronger sellers would have been expected to keep the auction below this level.
On Thursday, buyers were unable to defend 7848, which ultimately led to Monday’s poor structure being cleaned up and a test of the Weekly Smashlevel at 7783, where responsive buyers once again stepped in.
Heading into Friday’s session, the auction was in a short-term downtrend, forming lower highs and lower lows. The key question was whether stronger buyers would step in following the cleanup of Monday’s structure or whether sellers could sustain downside pressure. Buyers reclaimed the intraday Smashlevel at 7822 overnight and, after several attempts, regained 7848 during RTH, ultimately breaking the pattern of lower highs on the daily timeframe and ending the week on a stronger note (see Figure 4).
Looking at the weekly levels, buyers defended the key 7783 level both early in the week and on Thursday, ultimately building value cleanly higher for the week. While buyers struggled to gain meaningful traction above the prior ATH at 7848, stronger sellers failed to step in on the tape.
How the market behaves around 7848 will be key moving forward, as it should provide clues as to whether the auction is ready for another phase of imbalance or will continue building value within the current range. Remember, we’ve been trading within a multi-week balance, meaning a successful breakout could travel a considerable distance, while a failed breakout could trigger a rotation across the range.
Weekly Levels in Review
Economic & Earnings Calendar
Market Structure
🟨 Daily: BALANCE | 5-Day | High: 7897.50 / Low: 7778.25
🟩 Weekly: OTFU | Ends at: 7778.25
🟩 Monthly: OTFU | Ends at: 7575
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 initiate and sustain a breakout from the multi-week balance area and take advantage of a tape that currently lacks stronger sellers. Early-week value development relative to the prior ATH at 7848 will be key to monitor.
If we open with weakness, the key for buyers will be to defend 7848, the prior ATH and multi-week balance high. Failure to hold this area would be a short-term bearish development, opening the door to a retest of last week’s VAL at 7807, which aligns with Thursday’s NVPOC.
If we open with strength, the key for sellers will be to defend the current ATH at 7897. Failure to do so would open the door to price exploration into uncharted territory, marking a phase of imbalance as the auction searches for value.
The weekly Smashlevel is at 7848, the prior ATH and multi-week balance high. Holding above 7848 would be short-term bullish, targeting the current ATH at 7897. Acceptance above 7897 would signal strength and open the door to bullish continuation toward the resistance area between 7980 and the Weekly Extreme High at 8010, where responsive sellers can be expected.
This resistance area coincides with the 50% range extension from the multi-week balance, a common target for profit-taking following a successful breakout. Additionally, the Monthly Extreme High at 8010 adds another layer of significance to this area.
Break and hold below 7848 would be short-term bearish, targeting a rotation through last week’s value area toward its VAL at 7807, which aligns with Thursday’s NVPOC. Acceptance below 7807 would signal weakness and open the door to bearish continuation toward the support area between 7740 and the Weekly Extreme Low at 7710, where responsive buyers can be expected.
This support area coincides with the halfback of the multi-week balance, a common target for profit-taking following a failed breakout, as well as the unfilled bull gap at 7741. This is a crucial area for buyers to defend, as failure to do so would open the door to a full traverse toward the balance low.
Visual Representation
Key Levels of Interest
In the upcoming week, I will closely observe the behavior around 7848.
Holding above 7848 would target 7897 / 7980 / 8010* / 8040 / 8075
Break and hold below 7848 would target 7807 / 7740 / 7710* / 7648 / 7589
*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!
“impulsive decisions at unfavorable locations” sounds like you’ve been following my trades
thanks