The First Trade

Proper context can start the day with a solid win and make all the difference.

CHARTROOM LINK
(pre-open Market Tour begins at 8:55 ET)

Through the prior close…
Day-to-day reversals, intraday reversals, and now overnight reversals, each had begun appearing within the week-long range before Monday’s open. The latter’s appearance — Sunday night’s reversals — warned us not to trust Monday’s gap up. Our distrust proved well-placed, as the 2048.00 open’s extension to 1256.50 was reversed down to 2042.00 by noon. Its recovery to 1251.00 also proved untrustworthy as it was reversed down to 1233.50 into the close.

Overnight action’s new info…
Initially extending down to 2029.25. Its reaction extended higher to 2041.00 at Europe’s opens. Tumbling quickly back down to 2032.50 proved only temporary, recovering as quickly and then extending to a fresh high at 2043.00.

If, then…
Sellers had not gained traction before Monday’s last downleg broke lower during the final hour. Extending down immediately this morning would require gapping down to fresh lows. Retracing yesterday’s last downleg overnight doesn’t yet prevent gapping down to resume the decline. But it does put that decision to the intraday crowd, instead of it being forced on them by overnight sponsorship — and that makes the setup more reliable. It also presents the opportunity for a “session-long rally” setup. But if the decline is extending, then the overnight recovery should begin melting away now

First Trade…
Exiting the open at 9:45 above 2044.50 would be likely to trigger the 2041.50 bias-up signal at 10:15. Exiting the open under 2039.25 would be unlikely to trigger bias-up.

Proper context can start the day with a solid win and make all the difference.

CHARTROOM LINK
(pre-open Market Tour begins at 8:55 ET)

Through the prior close…
Friday’s gap up had extended a little higher post-open, but only enough to retest the 2053.00 pre-open high by 5 ticks. Weakening indications and a week of reversals suggested the opening strength wasn’t durable. In fact, the balance of the session trended back down. A very late low finally filled the gap back to Thursday’s 2035.00 close by 5 ticks, then bounced to close at 2041.00-2042.00.

Overnight action’s new info…
After bleeding into intraday action Friday, last week’s reversals have now bled into overnight action. Sunday night’s choppy open eventually resolved down to retest Friday’s low and attack 2033.00. Bouncing to 2041.00-2042.00 resolved down again into and out of Europe’s opens. Retesting 2033.00 reacted back up quickly, producing a surge to 2051.50. Sideways ranging from there has been supported by 2046.00.

If, then…
Friday’s intraday decline had neutralized the attraction below back to Thursday’s close. Chipping away at the support of the week-long range’s lower-end stopped short of actually breaking support, as the test held through the close. But any break lower — especially through Monday’s open — would be credible for launching a deeper correction. By the same token, almost any firm open would be credible for returning back to the range’s highs, potentially avoiding a deeper correction to launch a breakout to new highs. The overnight drop had suggested initially that the break lower was coming. But the surge’s recovery is suggesting the latter scenario. We might not know until the open has either maintained or rejected a recovery above Thursday and Friday’s opening ranges, which is essentially 2045.50-2049.00.

First Trade…
Exiting the open at 9:45 above 2049.75 would be likely to trigger the 2045.25 bias-up signal at 10:15. Exiting the open under 2044.00 would be unlikely to trigger bias-up. Exiting the open above 2053.50 would be likely also to recover the 2050.50 bias-up target at 10:15 to renew the bias-up signal.

Proper context can start the day with a solid win and make all the difference.

CHARTROOM LINK
(pre-open Market Tour begins at 8:55 ET)

Through the prior close…
Thursday’s gap down to Wednesday afternoon’s low was on a mission. There were attraction below to neutralize. From “unfinished business below” at 2044.50 and its lower attraction to 2039.00, to retesting the 2035.00 lows that had defined the week-long range. Probing even lower into the final hour to 2026.00 finally found a relevant price accompanied by improving RSIs at a relevant time. Recovering into the close fulfilled a corrective bounce target at 2036.50. Sellers gained traction.

Overnight action’s new info…
Dipping to 2030.25 retraced 61.8% of Thursday’s late bounce, and bouncing retraced the dip. The bounce extended back into yesterday’s opening range up to 2049.00 before consolidating.

If, then…
Having gained traction for their effort, yesterday’s sellers should be rewarded by trending down through this morning’s bias environment. That can begin from gapping up, as the open is currently indicated. But gapping up above yesterday’s 2043.00 prior high would suggest that buying pressure is inverting the bearish setup to bullish. This possibility was raised by yesterday’s close having eked its way back above the trading range’s 2035.25 lower-end. A “session-long rally” setup is not possible, but marginalizing sellers for the day would make a bullish morning. Of course, turnabout is fair-play. In the same way that negating yesterday’s bearish setup may become bullish, now the overnight bullish setup would become bearish by not opening high enough.

First Trade…
Exiting the open at 9:45 above 2044.50 would be likely to trigger the 2040.75 bias-up signal at 10:15. Exiting the open above 2050.50 would be likely to renew the bias-up signal by recovering the 2046.00 bias-up target through 10:15. Exiting the open under 2039.25 would be unlikely to trigger the 2040.75 bias-up signal at 10:15.

Proper context can start the day with a solid win and make all the difference.

CHARTROOM LINK
(pre-open Market Tour begins at 8:55 ET)

Through the prior close…
Wednesday morning’s bias signal overcame the open’s traction, launching a bounce to the 2044.50 bias-up signal despite having trended down to the 2035.74 bias-down signal. The open’s downtrending was ignored even further as the morning’s no-bias trending exceeded 2044.50 by 10 points. The requirement to retest 2044.50 enabled an afternoon dip that only reached obligatory support at 2046.00 before surging again to test the 2059.50 upper-end of Monday’s final hour range.

Overnight action’s new info…
Despite Wednesday’s still overlapping the 2059.50 upper-end of Monday’s final hour range, fresh highs were probed anyway. But a reaction down from 2062.00 never recovered, and fresh lows into Europe’s opens have extended down to 2047.50.

If, then…
Wednesday’s session colored way outside the lines to a very rare degree, but not at all unprecedented. “Unfinished business below” remains outstanding at 2044.50. Delaying its retest is often compensated by also testing that signal’s timing window print, which was 2039.00. Another 3 ticks lower would target 2032.50 and then 2021.00-2022.00. Some degree of pullback is likely since yesterday’s buyers didn’t gain traction for their effort. But probing higher without gapping up is possible, and then a steep reaction down from a new high close would be probable.

First Trade…
Exiting the open at 9:45 under 2048.75 would be likely to trigger the 2051.75 bias-down signal at 10:15. Exiting the open above 2053.50 would be unlikely to trigger bias-down.

Proper context can start the day with a solid win and make all the difference.

CHARTROOM LINK
(pre-open Market Tour begins at 8:55 ET)

Through the prior close…
Trending down relentlessly Monday night and gapping down Tuesday held a test of Friday’s morning’s 2039.00 opening print. Its support produced a bounce to 2048.00 that was reversed to fresh session lows coming out of the noon hour. The bias environment’s bounce to 2046.00 was also reversed to fresh session lows at 2034.25 into the close. The session’s last sell signal that triggered under 2042.50 was neutralized by its last bounce limit that was violated above 2035.75.

Overnight action’s new info…
Spiking up into the futures close was extended overnight to 2049.50. That has been retraced down to 2040.50, which an interim bounce to 2047.00 has reversed down to test what had been yesterday’s last sell signal under 2042.50.

If, then…
Tuesday avoided extending the overnight slide. But the burden of proof is on buyers at this stage of the pattern. Not yet recovering or forming an accumulative pattern only keeps the door open to extending the decline. Having ended Tuesday’s cash session at fresh relative lows, only gapping up Wednesday above Tuesday afternoon’s 2046.00 high can invalidate the decline’s momentum. Probing above it overnight and still not recovering it through the open would only add to the downside selling pressure. Regardless, now having testing 2044.50, a break back under 2041.00 (tested once already) would likely resume the decline.

First Trade…
Exiting the open at 9:45 under 2041.00 would be unlikely to trigger the 2044.50 bias-up signal at 10:15. Exiting the open above 2046.00 would be likely to trigger bias-up.