Markets come into the week with ES still firmly in bullish structure, but now with at least one early sign that this directional leg may be nearing a decision point. Buyers were clearly in control again last week. Sellers had multiple opportunities to gain traction and failed badly. Even when ES was capped below 7177-7182 (Balance Top) for two full sessions, they still could not produce the type of downside follow-through that would have validated a real failed breakout. Instead, sellers were squeezed, ES extended into 7269-7274 and 7280 reaching the 100% balance extension. That is not the behavior of a market under meaningful pressure. At the same time, Friday’s high did leave behind some notable excess, and while a single excess high means very little on its own, it is enough to make this week worth handling with a bit more care.
The core thought is fairly simple. ES remains strong unless and until price proves otherwise. The excess high is warning sign #1, not a reversal signal. If this truly is the end of the current directional move, then ES should easily reach back down to last week’s POC 7169. Anything less than that, especially by early in the week, would likely keep the dip-buying theme intact. Just as last week’s inability to reach 7115.5-7121, two week’s ago VAL, kept sellers under suspicion. This week the market needs to show real downside response if that excess high is going to matter at all.
For me, 7232-7236 is the key pivot to start the week. As long as that area holds from above, bulls remain in control and Friday’s high stays in play. ES has the benefit of multiple breakout single prints from Thursday, and building out volume above that area would be broadly constructive. In other words, the market can afford some early weakness or even a look-below-and-fail of 7232-36 without damaging the larger bullish case. If Friday’s high is taken out, then we continue to press higher trimming longs as we go.
On the other side, if 7232-36 is lost and does not quickly reclaim, then the daily timeframe is brought back to balance. In that case, I would expect a back test of 7206-7211, which is the area from which Thursday broke higher with force. Ideally, bulls should be able to hold that zone, or at worst produce a quick LBAF perhaps down toward 7197, and then reclaim 7232-36. If they cannot do that, then it becomes warning sign #2 and the excess high may actually have some teeth.
Below there, 7177-82 should still be reactive, but it would need to trigger a reclaim higher weekly levels. A loss of 7177-82, absent a quick failed breakdown, would be a more meaningful warning sign #3 and would begin to fit the idea that Friday’s high may have been the end of this directional push. If that starts to develop, then 7164-7169 comes into focus quickly, with 7147-54 to follow (The $$ level that has reduced trust now).
This past week’s RTH low sits at 7136.75, with the ETH low at 7131.25. Taking out 7136.75 would bring the weekly timeframe back to balance and objectively pause the trend on intermediate timeframes. Even then, it is important not to overstate the bearish implications too quickly. We still never tested 7115-21 last week, and I would still expect buyers to respond there or on a quick LBAF. Persistent weakness below this past week’s low could open a move toward 7077-7087, which is my major downside target for the week if sellers finally start finding traction. Even there, though, a backtest of the prior all-time high breakout around 7043 ETH and 7031 RTH could still be entirely constructive. So any intermediate or higher timeframe bearishness should remain tempered unless the market starts doing much more technical damage than it has so far.
At this stage, the cleanest way to frame ES is that buyers still deserve the benefit of the doubt, but the market has finally given us something worth evaluating on the downside. Friday’s excess high matters, but only if sellers can actually force follow-through. Until they do, this remains a market where weakness is more likely to be bought than feared. Respect 7232-7236 as the key early pivot. Above it, the trend remains intact and higher stays in play. Lose it, and the market may finally be ready for a “deeper” pullback, but even that would need to prove itself step by step. For now, the burden of proof remains on sellers.
