Post-open Review

Gap down recovery is rejected.

The 2790.25 overnight low had been retraced up to 2810.25 before the open. Flat-to-lower ranging greeted the open at 2802.00 where a blip-down to 2799.00 snapped back up to test the 2813.00 Globex opening print. It held.

The 2813.00 Globex opening print not only held, but it snapped back down to 2799.00, and then through it to touch the 2790.25 overnight low. No lower.

Back above 2798.25 has triggered a bounce whose 2709.00-area target is met. Fluctuating choppily around it is threatening to become something much more substantial than only a temporary bounce:

Coming out of the bias environment back in positive territory would form a sort of Isolation setup. Accumulative, exactly as last week’s failed rallies were distributive. Like any setup, fully forming without triggering — in this case, reversing down again after only recovering — could be as bearish as the reversal would have been bullish.

The bounce is testing its 2811.50 inflection point, and retesting resistance at the 2813.00 Globex opening print. Back under 2805.00 would signal that buyers failed, possibly also marginalizing them for the day. But extending higher into the noon hour would more likely target 2830.75.

Attempting a fourth reversal this week.

Monday, Tuesday and Wednesday each contained intraday rallies that were retraced entirely that day. The pattern is distribution. All of that recent selling helped yesterday’s rally, which had far less challenging ballast.

But the Monday, Tuesday and Wednesday pattern never suggested it was done. And now yesterday’s significant intraday rally has been retraced by more than 61.8%.

Failing to recover at the open was likelier to trend down, next targeting 2830.75. The open’s low touched it and reacted up sharply to 2843.50. Now the bounce has failed, probing fresh lows again by to at least 2828.25.

The next lower objective is 2823.75. And then a retest of yesterday’s lows. Another bounce can’t be dismissed, but it otherwise appears that the downside remains intact.

Open’s surge rejects bias-down tests for bias-up trigger.

The pre-open Market Tour ended as an overnight bounce up to unchanged at 2827.00 began collapsing. It extended to 2815.00, and then blipped-down to 2813.75 in reaction to 8:30’s econ report. Firming from there greeted the open at 2820.00, where price immediately surged. And surged.

Suddenly the probe under this morning’s 2823.50 and 2816.00 bias-down parameters had become a threat to trigger the 2835.50 bias-up signal. Which did trigger, and just met its 2842.00 bias-up target. Persistently overbought 3-minute RSI remains persistently overbought.

Now might be an appropriate time to pause for a message from this week’s sponsor, the failed intraday rally. The pattern could be solid, and could be guaranteed to repeat again, multiple times. But not necessarily today. We’ll certainly monitor for a reversal setup, and keep the door open to retracing this morning’s surge, but a reversal could be delayed.

Back to regularly scheduled programming… Greeting the open back above yesterday’s lows and maintaining that recovery forms an Isolation setup. Avoiding yesterday’s lows today and tomorrow would target a retest of this week’s ~2860.00 high, which exiting the bias environment above its 2842.00 bias-up target would help. Rejecting the setup today would be very bearish, and once again there is no “unfinished business” above. Back under 2837.50 would suggest a reversal is underway.

Bias-down signal holds multiple tests. And still being tested.

My pre-open update noted that the 2828.50 bias-down signal was unlikely to trigger ahead of FOMC. Sponsorship is difficult to generate ahead of an event. It wasn’t even near being tested as the pre-open pullback had tested and retested 2834.00. But a post-open collapse from the 2836.50 open pierced 2828.50.

Its test held, reacting up to 2832.00. As did the next deeper test. One more test after invoking the grace period touched the room for noise down to 2825.25, and recovered enough to avoid triggering bias-down. An offsetting test of the 2842.25 bias-up signal is in-play, but 2828.50 was tested again.

Perhaps the choppiness and delay is the effect of Brexit headlines crossing during the open. But the opportunity for strong hands to have signaled a bearish sentiment has passed, at least until backing-and-filling to resistance, at least with any confidence.

At least a bounce up to 2837.50 remains likely initially, so long as 2828.50 continues holding as support. But only so long, as not yet rallying off of 2828.50‘s tests when the bias environment starts lapsing would suggest that patient buyers are letting sellers have more room.

Post-open weakness absorbed.

The 2849.75 open immediately bounced to within 4 ticks of the 2853.00 overnight high, and another bounce came within 3 ticks. Just coming to within 3 ticks would suffice for neutralizing the attraction to calculable and RSI objectives, and 4 ticks for retesting a new high.

The preference for a “new Globex trend extreme” is to actually touch it intraday, but that wouldn’t have prevented sellers from gaining traction. They tried. A sell signal under 2847.00 was probed, but never by at least 4 ticks. And the 2847.75 bias-up target was retested several times as support, but it held through 10:15 to renew the bias-up signal.

So, bias-up is renewed, next targeting 2853.50 and potentially 2857.00. A break maintained back under 2847.00 could test the 2841.75 bias-up signal as support during the bias-up environment without reversing the trend down.