Market Wrap

If Tuesday’s close were just a little higher… then the rally — corrective or otherwise — would be back on-track. Tuesday’s close couldn’t have been much lower without signaling that the corrective rally had ended. Goldilocks might call that close “just right.” I think it was just wrong, and that the overnight action will make up for lost time.

Pattern points… (Setups and technicals)[pay]
Tuesday’s session was pessimistic. The open gapped down, the prior range’s lows were probed, and the close was negative. Not bouncing briefly at the open would have been more pessimistic. Closing under the morning’s low would have been more pessimistic, too, instead of recovering the afternoon’s lower low.

The interim high between the morning and afternoon lows was attacked into the close. But not touched. That’s pessimism. And it’s all “ineffectual pessimism.”

Ineffectual pessimism wasn’t very appropriate at this stage. Closing between 1931.75-1926.75 wasn’t appropriate. Wednesday’s open should compensate for the delay by gapping, up or down, sharply.

Too little was pointing either way to consider a hold-long or hold-short. But what there was did point up more so than down. There was the ineffectual pessimism that restrained the afternoon’s fresh low, or that inhibited the afternoon’s attack on the noon hour’s high. There was the overbought RSIs at the noon hour’s high that required a retest, the accumulative pattern at the afternoon’s low, and the immediate surge back above 1931.75 following Tuesday’s close.

Don’t forget the morning’s late no-bias holding the bias-down signal that didn’t offset it with a test of the 1937.50 bias-up signal. Trending down instead did fulfill the bias-down target’s selling pressure.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Somehow rejecting all of that overnight, to gap down Wednesday, would confirm Tuesday was NOT ineffectual pessimism. Gapping down under the afternoon’s low might behave as a “session-long decline,” and new lows would be in-play. Otherwise, gapping up Wednesday to immediately reject Tuesday’s ineffectual pessimism would resume the rally to 1951.00.[/pay]

Look for at least one update overnight or ahead of the Morning Market Tour… My thoughts on the day’s econ calendar are linked here.

If Monday’s rally were bullish… then did it require closing above the open? The afternoon’s decline retraced the morning’s rally. All of the session’s net gain was already produced at the open, overnight.

Pattern points… (Setups and technicals)[pay]
Monday’s open gapped up to 1934.00, but didn’t extend higher immediately. In fact, the opening 15 minutes of volatility had lapsed. Resistance was 1934.00, so extending above it wasn’t just noise. And that extension fulfilled its target up to 1941.00.

So, was retracing it all just noise?

Yes. So long as the open’s retest holds the afternoon’s retracement, the rally can resume. The morning’s extended rally was created by buying pressure, triggered above 1934.00. It was not an effort to stretch the rubber band so it could snap back down. The afternoon’s retracement didn’t snap back down, but tested th morning’s 1934.00 open without extending through it.

Granted, the 1941.00 interim high did fulfill the buying pressure that was triggered above 1934.00. Having retraced back to the 1934.00 trigger, closing more than 61.8% of the way back to 1941.00 (above 1937.50) would have signaled another rally attempt underway from Friday was topping. That didn’t happen, as Monday’s late-afternoon bounce held at 38.2% up to 1935.50, 2 points shy of retracing 61.8%.

The close was overlapping 1932.50. That was the afternoon’s bias-down signal, and relevant support. Closing decisively under it would have been bearish. Its test wasn’t rejected, which would have been bullish. Gapping down Tuesday would form an Island Reversal, but not gapping down would be likely to test fresh highs.

[/pay]What’s Next… (Outlook and opportunities)[pay]
A presidential press conference is scheduled from Monday afternoon. And Tuesday’s econ calendar is the first in a week to have any influential items. The less distraction, the more potential for extending higher. Making it through an otherwise distracting event without reversing down would be more capable of resuming the rally.[/pay]

Look for at least one update overnight or ahead of the Morning Market Tour… My thoughts on the day’s econ calendar are linked here.

If Friday’s rally means the downleg has ended… then Monday’s open should underscore the point.

Pattern points… (Setups and technicals)[pay]
Thursday night’s “new Globex trend extreme” was retraced so much that Friday’s cash session chart developed entirely in positive territory. But there was complexity to the overnight dip, so it must be retested intraday eventually.

Friday afternoon’s rally peaked at its 1928.00 target, which was the target of Tuesday afternoon’s buy signal that was derailed by the Russia-Ukraine headline. Its buy signal was 1923.25. Coincidentally, that’s where Friday’s futures settled.

Whether or not Friday’s buyers gained traction for their efforts is not predictive, since Friday afternoon participants are weak-handed. Whomever they are, meeting and holding a target (1928.00) does mean their buying pressure was fulfilled.

More informative to the bigger picture is that 1926.75 held as resistance through the cash session close. That is the noise range under 1931.75, whose recovery would signal a bigger bounce or recovery underway. Holding a test of its proxy suggests that a corrective bounce just ended.

If a corrective bounce did NOT just end — if Friday’s 38-point rally from the 1890.25 overnight low up to 1928.25 is the beginning of something bigger — then it should be underway already at Monday’s open. No more backing-and-filling is needed. Gapping up above 1931.75 would target at least 1951.00-1953.75, or higher.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Don’t forget there is NOT a Strategy Session this weekend. The Chartroom should be available Sunday night for the Globex open.[/pay]

Look for at least one update overnight or ahead of the Morning Market Tour… My thoughts on the day’s econ calendar are linked here.

If Thursday’s low is only temporary… then the next lower low is in an entirely different zip code. But that’s not going to be an issue if sellers aren’t in control of the open.

Pattern points… (Setups and technicals)[pay]
Two rallies had failed within 24 hours of each other. First was Wednesday’s morning-long 18-point surge to 1923.50. Then came the pre-open surge to fresh highs attacking 1926.00. Both Italy’s triple dip news and the Russia-Ukraine headline were retraced. But not reversed. And that let the market focus on the impending weekend.

Thursday’s sell-off fulfilled the third lower lower close that was required by last Thursday and Friday’s confirmed breakout. That setup doesn’t require lower lows, but neither does it preclude extending down. Meanwhile, the past several sessions have consolidated at the lows, but not trended down. Even Thursday’s day-long decline that probed new lows still ended the day fluctuating around the range’s lows.

The past week has formed a Falling Wedge-like pattern (depicted on the post-close Market Wrap recording) that was entered aggressively. It is usually then exited aggressively. The alternative is to react up bullishly. The impending weekend’s illiquidity either accelerated selling pressure so that its absence Friday would allow a rally, or else a capitulation is underway.

[/pay]What’s Next… (Outlook and opportunities)[pay]
There is no Saturday Strategy Session this weekend. Also, the Market Wrap will begin early so it can end before the close. So, be sure to request any chart analyses intraday.[/pay]

Look for at least one update overnight or ahead of the Morning Market Tour… My thoughts on the day’s econ calendar are linked here.

If Wednesday’s opening surge had not been so productive… then would the afternoon have resumed the rally, and extended it even higher?

Pattern points… (Setups and technicals)[pay]
Wednesday morning’s rally was substantial. It gained 18 points from the 1905.50 open, and the open was already above the 1903.00 pre-open low. Probing above the 1918.50 bis-up signal during the no-bias environment was retraced as required, when required. The rally could have extended higher. But it did not.

Was that bearish, or was it “ineffectual pessimism”? That depends on the reaction down.

The balance of the session did remain under pressure, exiting the bias environment under the noon hour’s low. But that didn’t extend, and nothing else about the afternoon was bearish. It didn’t even return to negative territory.

Strong-handed sellers would have exploited the opportunity. Meanwhile, patient buyers resisted exploiting the afternoon’s weak-handed sellers. That last statement will need to be proved at Thursday’s open. Having failed to gain traction Wednesday, resuming the rally immediately Thursday would require gapping up.

It probably is an either/or situation. If not already rallying at Thursday’s open, then at least a retest of Wednesday’s 1903.00 pre-open low will be likely. And a retest of Wednesday’s low at this stage would be vulnerable simply to resuming the decline.[/pay]What’s Next… (Outlook and opportunities)[pay]
As we’ve been discussing during the Market Tours&Wraps, Thursday morning’s BOE and ECB policy announcements are hitting currencies at interesting points in their patterns. I’m reasonably certain the event(s) will figure into the day’s timing and price action.[/pay]

Look for at least one update overnight or ahead of the Morning Market Tour… My thoughts on the day’s econ calendar are linked here.