The gap down from last weekend sparked a meaningful move that aligned well with the previously discussed extreme levels. This included the 45–54 and 72–81 gap-measured ranges, as well as the 108–115 daily/weekly extension. Going into Tuesday’s close, we saw a final flush into the 6818–6823 liquidation zone, which left behind a spike down that was immediately rejected.
A failed spike down is of more importance to bulls vs a cover rally with no spike.
This was a critical moment where buyers executed and sellers failed. Overnight trade pushed above Monday’s EU low before rotating back down and sweeping the spike lows just ahead of Wednesday’s open, marking the TACO pivot. From there, price extended up to 6906, where it was quickly rejected, and then rotated lower to the halfback of the TACO event candle (6821.75–6865.75).
From last weekend’s exhaustion plan:
If ES flushes below 6952–6957 (the same weekly pivot as last week), it’ll be a double value gap down. In that scenario, I’d be looking for a good margin of safety, ideally paired with a gap exhaustion or zone trigger, to give, at minimum, a back test of 6952–6957 from below.
Following the exhaustion move, price worked its way back to the weekly open (Target #1), the weekly pivot 6950’s (Target #2), and the Friday gap fill (Target #3)—all objectives met.
On a weekly basis, the profile looks constructive, showing a double distribution to the upside and a close in the upper distribution. However, it’s important to note that weekly value gapped lower from the prior week. Until we reclaim the 6970s, move value higher, and take out the ATH, we have to respect the possibility of re-distribution, with larger players potentially using strength to exit longs.
📈Trading Higher:
Trading above 6969–6974, while watching for a LAAF or failed reclaim, keeps the focus on a push toward new all-time highs and cleaning up the ETH high. Sustained trade above 6992–6997 should rotate price to 7013–7016, followed by 7036, where a LAAF becomes likely, especially with SPX 7000 nearby. Acceptance above 7036 opens a level-by-level move through 7054–7062, 7069–7083, and ultimately 7104–7124.
📉Trading Lower:
The 6922–6925 zone is my first key area for a LBAF and the primary level buyers must reclaim if we explore lower. This includes both Thursday and Friday RTH lows. Losing this area introduces risk of a full retracement of Wednesday’s range. Below that, 6908–6911 should be monitored for a potential “stick save” tied to the value gap and Wednesday’s close. Continued weakness opens 6890–6894, 6878 (last week’s VAL), and 6867–6874. A broader unravel becomes more likely below 6890–6894.
Last week’s low at 6822 sits directly in the liquidation zone that buyers must defend. Realistically, the entire 6800–6822 region needs to be respected until it’s clearly offered from below. This 22-point range includes the prior balance top at 6808. Any move lower that reclaims the January 20 spike and last week’s low will need to be decisive, with a swift reclaim of 6867–6874. Below 6800, watch the Dec low 6771.25 including SPY’s which would roughly land around ES 6766.
The worst-case scenario for bulls remains continued value building below the 6970s, and now below 6922–6925. For sellers, success requires this entire week to be used to build volume within last week’s lower distribution, specifically around the Tuesday and Wednesday ranges.
That’s all I have for now. With renewed tariff headlines involving Canada, we’ll see how markets respond at Sunday’s open—though it’s unlikely to be as dramatic as last weekend’s gap.
ES Live Chart: https://www.tradingview.com/chart/f8EEzTyy/