Post-open Review

About to retest yesterday’s shallow dip?

Resistance at 2388.00 held yesterday’s highs, overnight highs and the open’s highs. My warning in the Market Tour is in-play, that holding its test would be likely to reverse back under yesterday’s low.

But not necessarily abruptly. Barely testing 2388.00 didn’t stretch the rubber band, so its reaction may lack the velocity of snapping back down. And not testing the 2389.75 bias-up signal has prevented putting into play an offsetting test of the bias-down signal.

The two scenarios for this template are based on two responses to the Friday Factors of the weekend’s impending illiquidity. Both scenarios include a capitulative leg, at some point intraday. One of the scenarios is also influenced by the recent optimism — most recently yesterday’s shallow morning dip — and delays the deeper drop until the afternoon.

So, a bounce may be developing now. The first hour has already dropped 8 points to 2380.50, close to the 2379.00 bias-down signal. Being so far from the bias environment lapsing, correcting the post-open slide becomes likely.

Keep in mind that regardless of the bearish template, there no actual attraction below in-play. Trending down isn’t reliable. And where there’s no reliability to trend, there is vulnerability to reverse.

Pre-open bounce exits the open flat.

Surging into the ECB announcement had probed positive territory for the first time overnight. But only to 2386.50 resistance. Choppy ranging was supported by 2383.25 into and out of the open.

Blipping-up into the 10:15 bias timing window  attacked the 2388.00 bias-up signal to within 2-3 ticks. Bias-up wasn’t touched, let alone triggered.

Not touching the bias-up signal before signaling no-bias means no offsetting test of the 2380.25 bias-down signal is required. But this isn’t a “dry cleaners” morning, since price is essentially at the range’s upper-end, with room down to retest the overnight lows.

Hovering in positive territory through the morning could break higher when the bias environment lapses at 11:30-noon. Meanwhile, drifting back to overnight lows is possible.

Post-open surge and follow-through holds at resistance.

After a relatively narrow overnight range, the open was greeted unchanged from yesterday’s 2385.00 close. As often happens, volatility suddenly arrived post-open. A spike up attacked the 2388.00 bias-up signal to within 1 tick, and then fell back entirely to unchanged.

But the open held. Firming gradually returned to fresh highs, touching the bias-up signal in-time to invoke the grace period. It was still being touched at 10:30 to avoid triggering. This is a noN-bias environment.

The 2394.00 bias-up target is not in-play, but it can be tested anyway. Or, attacked up to 2391.50. Meanwhile, the 2388.00 bias-up signal’s test could still be reversed back under 2386.50 and extend down under yesterday’s lows, potentially testing 2375.00.

Pre-open surge extends post-open.

Yesterday morning’s 2372.00 high had been probed yesterday afternoon up to 2373.00.  That was probed overnight up to 2374.00. The next probe has extended up to 2387.00. That’s the sort of behavior yesterday afternoon’s restrained optimism avoided triggering.

This morning’s 2380.25 bias-up target was exceeded within minutes of the open. It was already exceeded by 7 points at 10:15. The renewed bias-up target at 2388.00 was already attacked to within 1 point. Its reaction down just touched 2384.00. Overbought RSIs at 2387.00 suggest its reaction down will be recovered.

Back under 2382.50 would start to signal a deeper pullback may be underway. It would likely recover, since post-open action is a trend (higher highs and higher lows) which is usually retraced eventually. But under 2382.50 could temporarily retest yesterday’s range.

Overnight rally not extending.

A pre-open pullback made it cheaper for the open to try duplicating the overnight rally. No takers. Reacting down from attacking 2377.00 had dipped under 2370.00 before the open, and extended to attack 2367.00 through the open. Ultimately, the opening 15 minutes of volatility only ranged narrowly at that post-open low.

Bouncing momentarily to 2372.00 didn’t attract buyers, either. That’s not the second instance, but the third — including Europe’s opens.

Bias-up triggered easily, since its signals are calculated from patterns that developed far below today’s action. But the bias environment still reflects timing. And if the bearish WedEX will be influential this morning, then this is the time for it. It’s too late for the signal to invert, so either it’s influential or invalid.

Back above 2373.00 would start to signal the latter. Not necessarily that momentum has reversed up, but that reversing down was no longer reliable. Otherwise, the bias-up environment can be retraced to its 2350.00 bias signal.