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, we transitioned to the ESZ26 (December) contract. As a reminder, my charts are not back-adjusted, meaning historical prices remain unchanged, resulting in a visible roll gap. This is a matter of personal preference, as both approaches have their pros and cons. For short-term traders, the impact is typically minimal since we focus on the auction one day at a time.
Monday kicked off with weakness, opening below the weekly pivot at 7711 and rotating lower, coming a few handles shy of filling the roll gap at 7659, where responsive buyers stepped in. The subsequent upside was capped by 7711 (see Figure 1).
“If we open with weakness, the key for buyers will be to defend the composite LVN at 7711. Failure to defend this area would be short-term bearish and open the door to filling the roll gap at 7659 (ESU26).”
It’s worth noting that Monday’s session did take out the previous week’s high by 2 handles, but I still interpret the weekly as one-time framing down, given the rollover and the fact that both SPX and SPY have yet to do the same.
The roll gap was officially filled on Tuesday, after which the downside was capped by the prior ATH at 7648 during a rather uneventful RTH session (see Figure 2).
Change took place on Wednesday, driven by the FOMC meeting. The market established a double distribution trend day to the downside, closing the session below the prior ATH at 7648.
The key for sellers was to establish acceptance within the lower distribution, making 7634, the upper end of Wednesday’s lower distribution, a key level for sellers to defend.
Buyers immediately reclaimed 7634 overnight, which triggered a significant squeeze (see Figure 3).
Wednesday’s weakness was rejected, ultimately resulting in a return to the 7711 level on Thursday, where we also closed out the week on Friday. The daily has essentially formed a poor high around that area, contributing to a bullish imbalance on the weekly profile. If this imbalance gets resolved to the upside, the pattern of lower highs on the weekly would be broken.
Looking at the weekly levels, the auction was basically contained within the key levels at 7711 and 7659, aside from Wednesday’s short-lived exploration lower. Looking at the weekly volume profile, it’s evident that sellers continue to struggle to gain meaningful traction below the prior ATH at 7648, which also marks the high of the prior multi-week balance.
Weekly Levels in Review
Economic & Earnings Calendar
Market Structure
NOTE: During rollover, one-time framing and balance can appear distorted due to the roll gap. Since I do not back-adjust my charts, expect these concepts to be temporarily skewed during the transition.
🟨 Daily: BALANCE | 5-Day | High: 7719.75 / Low: 7575
🟥 Weekly: OTFD | Ends at: 7719.75
🟩 Monthly: OTFU | Ends at: 7542.75
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 upside momentum after notably rejecting Wednesday’s double distribution trend day to the downside. Sellers continue to struggle to gain meaningful traction within the prior multi-week balance area, implying that the broader bullish structure remains intact.
The primary objective for buyers is to break the pattern of lower highs on the weekly, which has been in place since the all-time highs were established.
If we open with weakness, the key for buyers will be to defend last week’s LVN at 7697, which closely aligns with last month’s VAL (7695). Failure to defend this area would be short-term bearish and open the door to another test of the prior ATH at 7648.
If we open with strength, the key for sellers will be to defend the daily NVPOC at 7757. Failure to defend this area would set the stage for a revisit of the all-time highs.
The weekly Smashlevel is 7697, the LVN from last week. Holding above 7697 would be short-term bullish, targeting the daily NVPOC at 7757. Acceptance above 7757 would signal strength and open the door to 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 acceptance above the current ATH at 7838 could trigger another multi-week imbalance to the upside.
Break and hold below 7697 would be short-term bearish and target the prior ATH at 7648, which closely aligns with the bottom of Wednesday’s single prints at 7634. Acceptance below 7648 would signal weakness and open the door to 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 7697.
Holding above 7697 would target 7757 / 7825 / 7855* / 7895 / 7935
Break and hold below 7697 would target 7648-34 / 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!
I kind of miss 7711 not being the Smashlevel. :) I'll have to stay away from Slurpees until 7711 comes back into play.
Thank you