Post-open Review

A “Dry Cleaners” morning setup combines with a higher objective.

The overnight rally to 2860.00-2861.25 had ranged sideways back down to 2854.50, holding up through the open. Its optimism was never corrected pre-open, and the 2859.00 open blipped-up to attack the overnight highs. Its 5-point reaction down never threatened a sell signal before surging to 2863.50 on 10:00 econ reports.

The fresh high completed the 2-week old high close’s 2861.00-2863.00 gap fill. Its 6-point reaction down held above the renewed bias-up target to trigger a doubly-renewed bias-up signal. That’s not very reliable, being so far removed from the price action that created the bias levels.

But the high’s gap fill does suggest its 2866.00 high print will be retested, too. And its retest is likely to include a visit to 2869.00. So, 2869.00 is  essentially in-play. Which is credible despite all 5 of the first hour’s 15-minute checkpoints having overlapped the 2859.00 open to form a “Dry Cleaners morning” setup. The setup suggests that price action will be unwieldy, which might delay extending to 2869.00. But 2869.00 remains credible so long the bias environment exit is holding the 2856.00 post-open lows.

Gap up has put everyone on defensive.

Friday’s 2836.00 open gapped up above the past three mornings’ highs, blipping-up above Tuesday morning’s 2835.00 high up to 2837.50. And then reacting down to 2828.00. But only briefly as the 2829.75 bias-up target was exceeded in time to renew the bias-up signal. Its renewed bias-up target is essentially the 2836.00 open up to 2838.00.

Which is likely to be tested since the post-open dip was absorbed. This being a Friday, the morning’s bias signal tends to persist through the noon hour. That’s not equivalent to trending, and could be influential simply by retracing pullbacks.

Renewed targets don’t become “unfinished business” if left outstanding. And we’ve already established the current pattern of strong-handed distribution into strength. I’m giving fresh highs a benefit of the doubt, but back under 2829.00 would start to signal at least a corrective dip to 2825.25. Back under the 2823.00 bias-up signal before noon would suggest the strong-handed distribution pattern is rearing its head.

Post-open probe’s sponsorship is suspect.

Recovering from its initial 2795.00 low, the overnight Globex session eventually recovered to probe positive territory up to 2814.50. Its pre-open reaction held the 2806.00 bias-down signal as support, which held and recovered to greet the open at yesterday’s 2815.50 last prior high.

Kind of late to suddenly attract sponsorship for probing a prior high, especially after hovering just under it for several hours prior.

The surge’s 10-point reaction down from 2820.50 was recovered entirely, but not immediately. Extending higher held resistance at the 2823.25 bias-up target but still held up easily to trigger the 2816.75 bias-up signal. This is a bias-up environment, bias-up target met. Nothing prevents it from extending higher — a fresh high just touched 2824.25 — but a reliable durable recover would have been probing above the bias-up target earlier by 10:15.

Back under 2819.25 would start to reverse momentum down. Probing under the 2816.75 bias-up signal during the bias-up environment would require its retracement. Failing to hold 2816.75 as support after meeting its target would be bearish. Extending higher anyway would next target 2827.25 and potentially 2833.75.

Volatility is high, but sponsorship is limited.

Yesterday’s equilibrium around its 2823.00 open and close persisted to today’s open. Which was impressive, having probed 3-1/2 points under the 2817.50 bias-up signal. Which was also impressive, having rallied earlier to attack 2832.00. The open was contained within the overnight range, which was contained within yesterday’s range.

Volatility is high, but sponsorship is limited.

The open surged immediately to 2830.50 and began reversing down as quickly. The first half-hour ended back down at the 2817.50 bias-up signal. Volatility is high, but sponsorship is limited.

Most recently holding a test of the bias-down signal put into play an offsetting test of the 2828.25 bias-up signal. Which was quickly tested. And just as quickly reversed down. The overnight low is being probed by 3 points to touch the 2810.75 bias-down target. Volatility is high…

But is sponsorship still limited?

This is still a no-bias environment, so tests of either bias signal should define that end of the window. No-bias trending under the bias-down signal requires its retracement UNLESS the bias environment is exited under its 2810.75 bias-down target.

Detour quickly tests its target.

Having confirmed Friday’s breakout with yesterday’s lower close, bouncing is allowed without damaging the decline’s chart. Otherwise called “backing-and-filling,” the bounce allows strong-handed sellers to regain energy by allowing in weak-handed longs. The patience tends to be well-rewarded when the decline resumes. Meanwhile, the recovery can get carried away to the upside.

The likely upside for today’s backing-and-filling is 2830.75. It was met as the opening 15 minutes of volatility lapsed. Probing slightly higher to 2833.00 minutes later held a retest through the top of the hour. And the next half-hour has only ranged sideways.

Reacting down has room to test 2825.25 before starting to signal  a more significant reversal. Anything shallower would be likely to resume the rally — but probably only this morning or through the next timing window.