Market Wrap

Sunday night’s drop retested Friday’s low — itself, a test of 2767.00 — and retested it after the open. Breaking lower was avoided, but not rejected, as price was still ranging around 2767.00 while the opening 15 minutes of volatility was lapsing. So, it wasn’t rejected decisively, which was enough for rallying back up to the 2778.00 bias-down signal before the bias environment began lapsing.

A pullback to 2770.50 was recovered to 2778.00 when the afternoon bias environment began lapsing, and a pattern was formed. One more shallower dip was recovered to probe fresh highs into and out of the close up to 2780.00.

Unless already rejected overnight, the late break’s next higher objective is to fill the gap back up to Friday’s 2784.50 close. And it’s test would likely be probed by a couple of points. Any higher would start putting into play the 2796.00 and 2798.00 objectives above.

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Friday afternoon’s bearish WedEX influence prevented triggering bias-up, despite testing the 2778.00 bias-up signal. Its reward was limited to a 4-point dip that was already recovered when the bias environment lapsing had come within view. The no-bias restraint could ignore the bias-up signal’s resistance, which it did, surging to 2787.50.

That’s 22 points off the morning’s 2765.50 low. There was one chance for last Friday’s 2767.00 prior low to hold its test, and it made the most of it. Oversold RSIs there require an eventual retest, which would likely extend down to 2756.00.

Meanwhile, the gap back up to Thursday’s 2788.00-2788.75 close wasn’t filled but the structure containing it held its test. Friday’s close held above Wednesday’s lows and the optimal 2783.00-2784.00 area, keeping alive Thursday’s Isolation setup targeting 2796.00.

The bearish WedEX didn’t trigger decisively Wednesday and wasn’t rejected decisively Thursday. So, I hesitate to infer anything from its limited influence. But I would anticipate relentless trending through Monday morning in the opening 15 minutes’ direction, until disproved.

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Thursday’s Isolation setup wasn’t very productive. But it prevented a resumption of overnight selling. Isolating the overnight probe of Wednesday’s lows puts into play a retest of Wednesday’s 2796.00 high. Unfinished business is already left outstanding from 2798.00. Thursday morning’s backing-and-filling was usual for the setup, but no afternoon rally was unusual. Nevertheless, fresh highs remain likely so long as Wednesday’s lows hold.

Already rallying overnight to within proximity of the highs would be vulnerable to an early rejection of probing prior highs. That pattern has been absent for a couple of sessions. A hold-long setup narrowly avoided triggering, but almost any overnight strength would be credible for extending.

Meanwhile, we’ll assume the bearish WedEX is intact. It wasn’t triggered decisively at Wednesday’s close, so not rejecting it decisively at Thursday’s open — i.e. only opening at the level whose recovery would have been decisive — keeps the door open to trending down Friday afternoon and more so Monday morning.

Being a Friday, the Friday Factors will be relevant. The morning’s bias tends to persist through Friday’s noon hour. Sponsorship is difficult to generate, while counter-trend sponsorship is more difficult. And a new trend extreme close, which is nearby, would entrench the trend. It’s the rare expiration session that reverses intraday, but they are very productive when they occur.

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FOMC days are fun, more so when accompanied by the Fed Chair’s quarterly Q&A. The morning’s sponsorship triggered bias-up but left its 2798.00 target outstanding. It remains outstanding after attacking it to within 2 points at the morning’s retest of the 2796.00 overnight high.

Drifting into the FOMC statement triggered a drop to 2784.50 that extended to 2781.50. The Q&A triggered a rally to 2793.50. Then the nothingness triggered a reversal down to fresh lows. The cash session close was testing 2779.00-2780.00, and futures settled another 2 ticks lower.

The 2783.00-2784.00 area has been relevant support on Monday and Tuesday, as well as being last Thursday’s high. Probing under it when coming within 3 minutes of the cash session close triggered a very last-minute bearish WedEX. Probing it any later or not probing it at all would have triggered no signal.

Narrowly triggering the signal still qualifies, but it’s not optimal. Gapping up Thursday and exiting the open above 788.00-2788.75 would serve by proxy to reverse the signal to passively bullish. Meanwhile, the setup usually doesn’t influence price action until Friday afternoon and Monday morning, but not rejecting it could produce the bigger dip I had described in Wednesday’s First Trade.

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Tuesday’s open was greeted by already bouncing off of the 2782.25 overnight low. That didn’t leave much for a post-open rally, gapping up to the 2791.00 origin of Monday’s late drop. The retracement was likely because of the drop’s late timing. The morning only consolidated back down to unchanged at 2786.00.

A brief surge to 2794.00 peaked at noon, within 1 tick of Monday’s 2794.25 high. That wasn’t too pessimistic to prevent reversing down. The brief surge was doomed anyway, having left “unfinished business below” outstanding from the morning at 2782.00 bias objective. The reversal extended into the final hour, attacking 2782.00 to within 3 ticks and neutralizing it.

Turnabout is fair-play At least, it was for the late low, which had stopped optimistically short of touching the overnight low. Like noon’s peak, which was 1 tick short of touching Monday’s high before reversing down, the late low launched a 9-point rally back to the 2791.00 open. The session ended back in positive territory above Monday’s 2786.00 close. No new unfinished business was left outstanding.

Meanwhile, Bitcoin is resuming its collapse. Tuesday’s extension qualifies as part of the prevailing downleg, since the interim consolidation was kept shallow. A low, let alone a recovery , is premature.

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