Post-open Review

Sellers have trapped themselves.

The 2722.50-2731.50 overnight range had broken lower after Europe’s opens. It extended down to 2708.75 before bouncing pre-open. A post-open pullback held the 2714.75 bias-down target as support to launch a recovery back into and through the overnight range.

Having tested the bias-down target, not triggering its 2724.75 bias-down signal has put into play offsetting tests of BOTH bias-up parameters. Already, the 2738.25 bias-up signal has been tested up to 2740.50. A reaction down now testing 2734.25 must recover to maintain the 2745.50 bias-up target.

This afternoon’s bearish WedEX influence doesn’t yet have much room to be very influential without damaging the recovery attempt. Bearish WedEX on Friday need not be steep, but a reliable bottom would try creating as much room as possible to absorb corrections.

Pre-open drop having trouble extending.

The open was greeted in scare-mode, having slid from 2710.00 to probe Wednesday’s low down to 2682.00 pre-open. Which was new sentiment for the overnight, since the only other aggressive overnight dip had held support, well above Wednesday’s low.

Late breaks from an overnight range are often false. Sometimes only so false as to retest the range before resuming the breakout, but often reversing back through the range in the opposite direction. Last night’s pattern qualifies as a range for being contained within yesterday’s late bounce, but it was a very wide range.

Anyway, the post-open bounce back into the range up to 2698.00 has been reversed back under yesterday’s low. That’s the original breakout direction, and not back up through the overnight range. The 2691.25 bias-down signal triggered. Its 2681.25 bias-down target was met already when the open blipped down to 2677.75.

The bias-down target can be retested. And fresh lows can be probed. But not already recovering into the bias environment lapsing would suggest that 2654.00 and 2635.00 are in-play, too.

Gap up rejected.

Yesterday afternoon’s 2740.50 bias environment high produced fresh session lows. So, maintaining a gap up above 2740.50 would reject the prior afternoon’s drop. Gap up, maintain it, and extend it. Gapping up was maintained above 2740.50, but not extended. That’s still a position of strength, but with limitations.

One limitation was exceeded by triggering a sell signal under 2737.75. Then another limitation failed by not triggering bias-up. More so, both the 2735.50 AND 2742.45 bias-up parameters were rejected, putting into play offsetting tests of BOTH the 2718.00 and 2711.00 bias-down parameters.

The open’s setup wouldn’t have formed a session-long rally, but its failure is still likely to be as bearish as it could have been bullish. Having said that, this being a LATE no-bias environment instead of timely, not testing 2711.00 could avoid probing under yesterday’s lows and still maintain the Isolation setup that hasn’t been rejected.

Overnight bounce fails, fulfilling sellers.

Several potential recovery patterns were trying to form ahead of this morning’s open. Ultimately, either they didn’t form, or didn’t trigger.

The 2750.25 overnight high stopped 2 points short of piercing yesterday afternoon’s high, whose opening recovery would have formed a “session-long rally” setup. The Head & Shoulders broke lower, instead of higher. And opening back within yesterday’s range had isolated the overnight probe under yesterday’s range, but it has been retested already.

Also, the 2738.50 bias-up signal held its test, putting into play an offsetting test of the 2720.00 bias-down signal.

All of which is potentially bullish: Never actually probing yesterday afternoon’s high means the session-long rally never formed, so it was never rejected. The Head & Shoulders target was met. And the Isolation setup may be forming elsewhere this morning.

The bias environment was entered above yesterday’s low at 2737.50-2740.00. Exiting the bias environment back above its entry would isolate its probe under yesterday’s low. Similar to the overnight Isolation setup, but not optimal. So, its reward would still be a retest of last Wednesday’s highs, but the recovery must produce fresh highs today.

Already, the 2738.50 bias-up signal is being retested. So, the opportunity to bottom is being exploited, but there’s also a narrow window. There’s a big reward to bottoming, but there’s also a big consequence to not bottoming — 2685.00.

Probing fresh lows, but not stopping.

The overnight rally up to this morning’s 2795.50 bias-up target had reacted back down under the earlier Globex low to 2768.50. A pre-open bounce greeted the open at this morning’s 2775.00 bias-down signal.

A blip-up to 2777.50 reacted down sharply. And relentlessly. No meaningful bounce developed until filling the gap back down to last Tuesday’s 2754.50 cash session close.

The bounce quickly peaked at 2762.52 and soon reversed back down to fresh lows. “Lower prior highs” in the 2751.00 area are being under 2744.00. RSIs are again simultaneously oversold.

Two consecutive sessions trending in negative territory have fulfilled the objective to probe negative territory, if not also under Friday’s lows. That’s the first step to ending the multi-session decline. The second step is to recover a relevant level through a relevant window. Relevant levels to the lower prior highs now being tested include that session’s 2754.50 cash session close, its 2759.25 futures close, the last bounce’s 2762.25 peak, etc.

The trend otherwise remains down, threatening to develop into a new downleg retesting two-week old lows, and deeper.