The main objective last week, and again this week, is for buyers to reclaim the upper distribution from two weeks ago. That starts with holding the 4-day balance top at 6925.75 and using it as support on any pullback. Above that, we still have a large single print 6931-6960.25 that remains unfinished business.
All three majors (ES, NQ, and YM) failed in last week’s LVN, with ES and NQ both making higher lows relative to Tuesday’s low. As a whole, this is a significant failure for buyers. For the past few weeks, I’ve consistently emphasized that value building lower favors sellers, and that remains true heading into the new week. That’s why the low 6920s are so important for buyers to reclaim and push higher from. It’s also worth noting that Friday had two event catalysts, and neither produced upside acceleration. OPEX may have dampened price action, so I’ll give bulls a slight benefit of the doubt there. On the positive side, the weekly close was constructive. Even though price didn’t break higher, it did finish strong and right at a key decision area.
Weekly value migrated lower and developed within last week’s lower distribution, which does not yet confirm a structural shift on its own. If ES fills the single prints up to 6960 while value remains below, the risk of reversal increases, especially if that move is accompanied by IB failure and a move back inside or below Friday’s value. That would open the door to a higher-tempo decline and a revisit of last week’s low at 6791. The one nuance here is the lack of excess at the Thursday/Friday low near 6847, which means a revisit cannot be ruled out, but neither can a look below and fail (LBAF).
The broader 9-week balance continues to compress into a meaningful coil, with a projected expansion of roughly 216-234 points once a directional break occurs. Early signs of weakness begin with sustained acceptance below 6887-6897, while strength is defined above 6961-6974. Any resolution from this balance will likely show up through a combination of London range migration, value migration, opening drive behavior, one-time framing, or a gap open.
To re-iterate with a chart below, looking at the composite 2-week volume profile, we can clearly see volume building—most of it below 6900. Buyers still need to reclaim the upper distribution. Because value has been building lower, a failure by buyers to cleanly leave this range and accept in the upper distribution likely leads to a fresh liquidation and possible new lows. If buyers do gain acceptance in the upper distribution, then sellers trapped in the lower distribution will eventually have to cover. That could happen quickly next week, or it may take another week and a higher low before a more violent upside move unfolds.
💭This Week’s Playbook
The weekly pivot at 6887-6897 is the key zone to start with. It aligns with Friday’s VAL, recent pullback lows, overlapping value from Wednesday through Friday, and the lower distribution.
On the upside, holding above 6887-6897 targets Friday’s high. If that level breaks without a LAAF, price should continue filling the single print and target 6951-6953, followed by 6966-6969, where I would likely be down to runners. That area may require caution, especially if we see a failed reclaim of 6951-6953 from trapped longs exiting the February 12 liquidation break. Continued acceptance above opens 6972-6977, then the January FOMC low, and the NFP high at 7006.25. Above 7006.25, cleanup of the ETH ATHs should come relatively quickly.
On the downside, it’s worth remembering that trading higher first and failing is often more bearish than simply trading lower first. Holding below 6900 keeps pressure on and targets 6869-6873 first, with 6847-6853 (Friday’s low zone) becoming the key downside test. If we trade higher first and fail, a move into 6847-6853 with continuation becomes the bearish path. If we trade lower first into 6847-6853, which includes relative equal daily lows, a LBAF there could reasonably rotate price back toward 6898-6902. If that happens, be mindful of 6869-6873 as resistance from below on any failed reclaim.
A failed reclaim of the 6931-6960 single print has the potential to trigger liquidation back through 6800, an area bulls really do not want to test again. It may survive one more test, but it would need to be aggressively bid. If not, further downside targets include 6776 (December low), 6751 (futures low), and the 6730s.
ES Live Chart: https://www.tradingview.com/chart/f8EEzTyy/