Posts by Rod David
Trading Plan for 2/3
If … then .
Pattern points… (Setups and technicals)
No sellers were trapped by Monday afternoon”s rally to fresh session highs. That”s not often the case. Sure, rallies can develop without trapping sellers, but Monday afternoon”s rally was pretty substantial — 45 points off the morning”s low.
Nevertheless, Monday afternoon”s rally to 2018.50 began from the bias environment”s 1983.50 low. But the bias environment exit and final hour entry were still well under the noon hour”s 2000.00 high. That”s not a stable base for launching a durable rally. Perhaps if the rally had recovered a prior high, but it did not. (More on that in a moment.)
The 3:10-3:20 timing did trend up to fresh highs. That would have been bullish if either the bias environment exit or final hour entry had exceeded the noon hour”s high. Instead, the 3:10-3:20 window produced follow-through into the close, which has now lapsed.
So, what if the rally HAD recovered a prior high? Thursday-Friday”s ~2017.50 high was tested, but not exceeded. The next prior high that Tuesday”s open can recover to gain traction is essentially 2038.00+. That”s another 20 points higher, and probably needs news to achieve it — news that attracts more buyers through the open instead of reversing back down.
What”s Next… (Outlook and opportunities)
Had Monday”s 3:10-3:20 window not trended up, or not extended higher through the close, then Tuesday”s open need only have recovered Thursday-Friday”s ~2017.50 high to extend Monday afternoon”s rally. Instead, all available buying pressure has been expended without gaining traction for the effort. And oversold RSIs at Monday”s 1973.25 low require a retest.
Interesting rally this afternoon. Not
Interesting rally this afternoon. Not from the bias environment”s low, but after entering the final hour. Did it only stretch the rubber band for another drop, or is there some sort of news coming that will justify it? The post-close Market Wrap discussed that, here:
https://roddavid10.mitel-nhwc.com/join/fbfmcmj
Out of the frying pan…
Without any momentum, another rally tries to gain traction.
The bias environment”s 1995.50 exit and the final hour”s 1991.25 entry both were within the noon hour”s range. So, trending up during the 3:10-3:20 timing window doesn”t translate into traction.
That doesn”t prevent trending higher, it just makes trending higher likely to fail. And the bounce has trended higher to 2001.50.
Back under 1997.25 and 1995.25 would signal the trend reversing down. Closing under 1991.00 would confirm the decline”s momentum remains intact. Otherwise, there is room through 2004.00 to 2009.50 before signaling a bigger rally leg underway.
Daily Spot
A daily summary of high-profile members of several complexes… View a more detailed discussion of each chart at the end of today”s Market Wrap.
Eurodollar Mar Contract (EC, ETF: (FXE))
Several days of dull, shallow drifting lower were retraced Monday, which is to say that price firmed to attack 1.1370. Any higher Tuesday would be credible for surging to 1.1585. Otherwise, Monday”s firming was a last gasp before retesting lows under 1.1190.
Gold Apr Contract (GC, ETF: (GLD))
Monday”s gap down from testing 1277.50 was recovered entirely from 1266.50. There isn”t much room or time to delay reacting down again under 1272.00 to retest Thursday”s 1252.00 low and to resume Thursday”s break to complete the corrective dip.
Silver Mar Contract (SI, ETF: (SLV))
Friday”s 17.32 bounce high was retested Monday after gapping down, but the balance of the session essentially ranged narrowly sideways. A fresh low under 16.95 would be credible for resuming the decline.
30-year Treasury Mar Contract (US, ETF: (TLT))
The reaction down from Friday”s late test of the long-standing 151-28 target attacked 150-11 whose break would reverse the trend down. Otherwise, there remains potential for a fresh high testing 152-18.
Crude Oil Mar Contract (CL, ETF: (USO))
Friday”s late surge through 46.25 resistance to the longstanding 48.00 buy signal was extended higher overnight to test 50.00. Its retracement intraday was recovered. A second consecutive higher close Tuesday above 48.00 would confirm a bigger rally leg now underway.
Natural Gas Mar Contract (NG, ETF: (UNG, UNL))
Friday”s probe under Thursday”s lows ended the day still testing Thursday”s fresh low close, and not necessarily confirming the breakout. More fresh lows intraday Monday are also being recovered to overlap the two low closes, not necessarily extending the decline. Although unconfirmed, the decline gets a benefit of the doubt until disproved. But any initial strength Tuesday would be credible for extending higher intraday.
Warning shot under the keel.
This morning”s probe of fresh lows is signaling SOS.
The bias-down environment”s fresh lows down to 1973.25 left outstanding oversold RSIs that require being retested. That didn”t prevent an interim reaction up to 2004.00.
But 14 points of that recovery had developed above the bias-down signal before the bias-down environment began lapsing at 11:30. And it didn”t gain traction for the effort. In fact, the reaction down fell to 1986.00.
Something similar just happened. The afternoon”s 1994.50 bias-down signal was touched as the 3-minute window around 1:20 was lapsing, barely in-time to invoke the grace period. It wasn”t recovered through 1:30, so this is a bias-down environment, anyway
All of the buying pressure expended from 1986.00 was wasted, and now 1986.00 is probed by fresh afternoon lows.
This is a bias-down environment. If that”s not rejected dramatically coming out of the bias environment at 2:30, the the decline is probably resuming — at least, to test the oversold RSIs at this morning”s low, and potentially to launch a new downleg.