July Lows Reached, Now the Reclaims Matter
IN THIS EDITION
Strength is constructive.
Confirmation is still the job.
Recap
01 / MARKET CONTEXTES has reached the July lows we’ve been targeting for weeks. That completes a major downside objective and puts the response here at the center of this week’s plan. The monthly breakdown remains intact, but after this much liquidation, I want to see whether sellers can sustain another break lower and whether buyers can turn Friday’s relief rally into something more durable. Friday’s range is the immediate decision area; the August and September lows remain the larger recovery tests.
Last week’s roadmap allowed for a backtest higher and a potential lower high before further downside. That sequence played out, although Wednesday’s enormous volatility-crush rally complicated the path. The subsequent liquidation carried ES through 7541-7543, into the 7346 July RTH low, and then through the 7323.25 July ETH low, establishing a weekly ETH low at 7322.25.
The failed overnight extension set up Friday’s relief rally. The response was relatively muted given Thursday’s liquidation. Buyers now need follow-through.
The Structure
ES remains below its prior three-month balance, keeping the June and May lows in play. Reclaiming the August low at 7541-7543, followed by the September low at 7575, would begin repairing that breakdown.
Weekly value overlapped lower, and most of the week’s volume remains above price. Thursday and Friday did establish a substantial lower distribution, closely aligned with Friday’s RTH range: 7388-7396 below and 7469-7473 above.
A sustained break above Friday’s high would bring the daily timeframe into balance and could signal rejection of that lower distribution. Bulls need the breakout to hold. An immediate reversal back into the range would leave sellers with another failed recovery to work with.
If buyers regain Friday’s High
03 / TRADING HIGHER SCENARIO7469-7473 is the first test. I’ll watch for a look above and fail (LAAF) of Friday’s high. A failed breakout followed by renewed acceptance inside Friday’s distribution would suggest sellers are regaining control.
If buyers establish acceptance above it, the daily timeframe moves into balance. There is still substantial resistance throughout 7480-7520, a longstanding higher-timeframe decision area, so I won’t assume a clean rotation to 7497-7504.
The more consequential test is 7539-7543, which combines the August low with the lower edge of Thursday’s B-period single prints. Those singles extend to approximately 7580, with 7569-7575 marking the next major reference around the September low.
A rejection at either reclaim, or a LAAF within the singles, could set up another meaningful move lower. The confirmation I want is renewed acceptance below 7469-7473. Sellers need to push price back into the lower distribution to strengthen the case for continuation.
Conversely, sustained reclaims of 7539-7543 and then 7569-7575 would represent meaningful progress. A firm reclaim of the latter returns ES to September’s range and the past week’s central distribution.
Above there, Thursday’s A-period single prints begin near 7603 and extend to 7712.50. After that initial response, there is room for a broader rotation if buyers maintain acceptance.
If July gives way
04 / TRADING LOWER SCENARIOAcceptance below 7388-7396 would put ES below Thursday’s spike base and favor continuation toward 7377.25, Thursday’s RTH low, followed by 7371. Below there, the 7322.25 weekly ETH low becomes the larger objective. Keep the July lows at 7346 RTH and 7323.25 ETH marked along the way.
The setup I’m particularly interested in is a look below and fail (LBAF) of 7322.25. Residual demand sits at 7313-7317 and 7292-7296, with the YTD VWAP between them. That gives us an area to watch for rejection of lower prices. A reversal needs to reclaim the weekly low, with 7388-7396 the next important reclaim before the short-term picture begins improving.
Sustained acceptance below 7292-7296 increases the likelihood of a move into the June lows: 7247.25 RTH, followed by 7232.25 ETH, inside 7230-7238. If those lows are taken out, I’ll pause for a fresh structural assessment. Below them, 7177-7186 and 7164-7169 remain references to monitor, but the response to the June lows deserves attention before extending the roadmap further.
Let structure decide & tell the Story
05 / Final ThoughtsThe July lows have delivered the downside objective. Now I want the auction to show whether buyers can build acceptance higher or sellers can defend the recovery and extend the breakdown. 7388-7396 and 7469-7473 frame the immediate trade; 7539-7543 and 7569-7575 determine how much structural repair buyers can accomplish. I’ll favor continuation where breaks hold, watch closely for failed extensions below the weekly low, and let acceptance at the reclaims guide how much confidence I give a rally. The next trade needs to come from the response at these references, with room to reassess as the structure changes.