Posts by Rod David
Post-open review
EC-who? Yesterday”s plunge totally recovered, and then some.
Opening at the 2044.50 bias-up target initially ranged sideways up to 2047.00. Then it broke higher to test 2052.00. Twice.
Their 2048.00 interim low was also tested. Twice. And now 2052.00 is still being tested as resistance.
This is a renewed bias-up environment. Of course, its renewed bias-up target(s) at 2051.00 and 2053.25 have been met. But they haven”t been rejected. Extending higher in a bias-up environment is entirely credible. The next higher objectives are 2059.00 and 2061.50.
Back under 2050.50 would instead target a retest of this morning”s 2044.50 bias-up target.
Wednesday”s plunge wasn”t likely to
Wednesday”s plunge wasn”t likely to gain traction for many reasons. But already recovering nearly all of it before the open might require retracing some of the recovery before extending higher. Specifics are addressed in this morning”s pre-open Market Tour:
https://roddavid10.mitel-nhwc.com/join/mjvfwxp
The First Trade.
Proper context can start the day with a solid win and make all the difference.
Enter the Chartroom here (pre-open Market Tour begins at 8:55 ET)
Through the prior close…
Wednesday”s gap down held its bias-down signal. The offsetting test of its bias-up signal was fulfilled at the morning”s 2046.25 high, which probed 2 points into positive territory. Consolidating back into negative territory at 2036.00 never gained traction. In fact, rallying out of the bias environment”s exit came to within 2-3 ticks of the afternoon”s 2049.75 target. Having originated too late to be strong-handed, and having fulfilled buying pressure, negative ECB-Greece news triggered a 20-point plunge to fresh session lows attacking 2030.00 before the close.
Overnight action”s new info…
The plunge extended down immediately to 2022.50. Sideways ranging between 2021.00-2027.50 formed an Inverted Head & Shoulders. The pattern broke higher into Europe”s opens. Yesterday morning”s 2046.25 was just attacked to within 1 tick.
If, then…
The plunge began too late to invalidate the relevant action of two consecutive mornings that had rejected sellers. The recovery I described during Market Wrap is exceeding my minimum expectation for 2041.00. It may have gotten ahead of itself by already testing this morning”s 2044.50 bias-up target. But the potential for extending higher still outweighs the trend reversing down.
First Trade…
Exiting the open at 9:45 above 2042.00 is likely also to exceed the 2044.50 bias-up target through 10:15 to renew the bias-up signal. Exiting the open under 2034.00 would be unlikely to trigger the 2038.25 bias-up.
Trading Plan for 2/5
If not for the late ECB news… then a reaction down into the close was still likely. Just not as deep. But the target had been met essentially, and its sponsorship satisfied..
Pattern points… (Setups and technicals)
Two consecutive opening surges met selling pressure that was nevertheless absorbed, and then reversed to fresh session highs. Tuesday”s open gapped up and ultimately absorbed the morning”s drop. Wednesday”s gap down bounced, but still had to absorb a fresh session low before extending higher.
It”s difficult taking sellers seriously with those resolutions. That doesn”t prevent dipping — this was a major theme Tuesday morning, that its selling took price down, but it didn”t reverse the trend down.
Of course, it”s difficult NOT taking Wednesday”s late sellers seriously. The reaction down from 2049.00 to 2038.00 and then to 2030.00. Twenty points in 10 minutes. That has extended another 7 points to 2023.00 post-close.
Is this reaction just exacerbated by the “fortune” of its timing? The afternoon rally”s sponsorship was fulfilled by testing the 2049.75 target to within 2-3 ticks. Those buyers had no traction, anyway, since the bias environment exit and final hour”s entry were within the noon hour”s range. There was no other required upside. And after the news, it had become too late to attract countertrend sponsorship.
What”s Next… (Outlook and opportunities)
Wednesday”s late reaction can extend down near-term — and not just to test the 2023.00 post-close low. The rally from under 2000.00 Monday afternoon requires being retraced at some point. Its test would be vulnerable to extending down anyway. The more bullish scenario would be to already start retracing the drop before Thursday”s open, if not already opening above its origin.
A funny thing happened on
A funny thing happened on the way back to prior highs. Wednesday afternoon”s target had been met to within 2 ticks when ECB news hit… hard. The post-close Market Wrap recording about it is here:
https://roddavid10.mitel-nhwc.com/join/pcxtcmf