Post-open Review

Overnight lows broken easily through the open.

The last pre-open bounce had retraced overnight highs by 61.8% to test 2649.25. A head & shoulders pattern formed that was already resolving down to open back at the 2641.25 overnight lows.

Not isolating the overnight probe made 2635.00-2638.00 likely to be tested next. Post-open action trended down into it, bounced to touch the 2642.75 bias-down signal, and then probed under the range to 2634.00.

The 2635.25 bias-down target was not exceeded through the 10:15 bias timing window, so the bias-down signal was not renewed. But it is still a bias-down environment, vulnerable to extending. Usually it doesn’t extend when the bias target’s test has held. Today is extending — at least, probing lower — to 2630.50.

Exiting the bias environment under its 2635.25 bias-down target would suggest the next lower objective is in-play at 2623.00. Having probed fresh lows after 10:30, exiting bias environment back above its bias-down target would suggest that sellers are done.

Triggering then un-triggering bias-up.

Pulling back into the open from 2682.25 to 2674.50 was sufficient to correct the earlier overnight gains. We know that because the open surged, extending to attack 2682.00.

Interestingly, the price action seemed to be ignoring or at least compartmentalizing an ominous announcement from Israel regarding Iran. Apparently, that became impossible when crude oil had popped too much.

Eventually, price had reversed down to 2671.75. I’m assuming it’s a reaction to non-market news which is likely to be recovered. But that’s in contradiction to the 2678.25 bias-up signal failing to trigger, putting into play an offsetting test of its 2662.25 bias-down signal.

A reaction up to 2679.00 is trying to rally, anyway. Which it can, even with the objective outstanding below. Exiting the bias environment above its 2684.25 bias-up target would invalidate that objective below, but it can become “unfinished business.”

Back above 2679.00 would put higher highs back into play. Otherwise, another dip under 2673.00 would reinforce the 2662.25 objective, or something substantially lower this morning on the along that path.

Fresh highs avoided, delayed downside developing.

This morning’s premise was to probe yesterday’s highs above 2677.00 because its rally had gained traction, and its late dip had injected pessimism. The premise assumed that surging to fresh highs at 2677.50 through the futures close had developed too late to already fulfill the upside objective. None of which was disputed by the overnight range.

A setup developed that I discussed in the pre-open update. It was the breakout from the overnight range above 2672.00, coming within 60-90 minutes of the open. The lateness usually reflects weak-handed sponsorship, which was in-line with the other premise that fresh highs would fail.

The open did surge, but only briefly, and not at all to fresh highs. And it quickly reversed, trending down throughout the entire first half-hour. Yet, yesterday’s 2666.25 cash session close was only attacked, essentilly holding positive territory throughout. That’s an anchor.

The anchor didn’t prevent trending down further. The 2671.25 bias-up signal held to trigger late no-bias, putting into play an offsetting test of the 2661.50 bias-down signal. Its test should define the window’s lower-end. In fact, its test and retest down to 2657.75 just bounced to 2666.50.

Nothing prevents trending down much, much deeper under 2661.50 after the bias environment begins lapsing. Exiting the bias environment back above yesterday’s 2666.25 cash session close wouldn’t itself put back into play a probe above yesterday’s highs, but it would be a good start.

Gap up maintained and overnight rally extended.

Weak bases make weak rallies. But they can still make rallies. The secret recipe to extending a weak base’s rally is to keep pullbacks relatively shallow and/or brief. Excessive optimism can be very effective, until it’s not.

After dipping overnight to only attack yesterday’s 2638.75 cash session close, its reaction recovered almost entirely back to the 2654.75 overnight high. Post-open pullback potential to 2643.50-2645.50 was barely touched, keeping alive the rally’s momentum and remaining likely to recover. That was also a test of the 2645.75 bias-up signal as support.

The recovery wasn’t immediate, consolidating past the opening 15 minutes of volatility. But the recovery was productive, extending to fresh highs at 2659.25. Resistance is 1 point lower, and probes above it only overlapped it, never gaining traction.

A reaction down to 2651.50 violated the pullback limit. No accumulative pattern formed, but 2658.25 resistance is already being retested. A detached bar just formed up to 2660.25, and RSIs are diverging negatively. Back under 2657.00 would reverse the trend back down. Otherwise, extending higher has room up to 2677.00.

Yesterday’s low hold a retest.

We discussed a bullish setup during the Tour. So long as yesterday’s 2616.00 lows either avoided or absorbed a test through the open, its reaction up would have filled the gap back up to yesterday’s 2633.00-2635.00 close. But that bounce had played out already to open at 2632.00-2634.00. The bullish setup was inverted.

Inverted, and rejected. The opening 15 minutes of volatility plunged 22 points to 2611.25. Yesterday’s lows were broken. But the break’s low printed at 9:45, and never printed lower. That’s an opportunity for a low, an alternative method to absorb a test. A very choppy recovery bounced 11 points to 2622.25 by 10:15.

Bias-down triggered, but wasn’t renewed. The bounce has extended another 12 points anyway to attack 2635.00. This is a bias-down rally, and requires being retraced at least to its 2624.25 bias-down signal. Often, the 2718.00 10:15 print will be retraced, too.

Retracing the bias-down rally would prevent recovering the filled gap. And that would keep alive the downtrend. Otherwise, entering the noon hour above 2633.00-2635.00 would suggest a bigger bounce underway.