Post-open Review

Post-open straight shot higher.

Overnight testing of the 2758.00 bias-up target had briefly probed 2 points higher. The open was greeted by a 5-point dip to 2755.00, which was the last hint of pessimism. Now 20 points above the open and 27 points above Friday’s cash session close, the potential objective at 2775.00 is being probed.

That’s a lot of buying pressure expended, in a brief time, but it’s hardly the only indicia of optimism. Gapping up, rallying relentlessly, with each of several pullbacks limited to 2 points each… +/- 1 tick. Several negatively diverging 1-minute RSIs were offset by persistently overbought 3-minute RSI.

“Higher prior lows” at 2775.00 were the likely objective for maintaining and extending a gap up, and that’s now fulfilled. The context has been a temporary correction, having left Friday’s 2732.00 opening gap unfilled. The pattern is entirely capable of reversing down at any time, as soon as this afternoon. But not easily without 3-minute RSI leaving overbought territory, and then retesting the high’s simultaneously overbought RSIs. And nothing would require a reversal to be relentless heading down.

Extending the rally is possible. Fresh highs now are testing 2777.00. Trending higher from an external artificial catalyst would be a compelling short, i.e. Trump China trade tweet. Could the rally hover or head higher in hopes of such reinforcement, if not in fear of it?

Gap down holds. Only holds.

Hovering at the 2741.50 bias-down target since Europe’s opens had formed a Descending Triangle. The knee-jerk reaction to the pre-open Employment Situation report spiked down to 2730.00 and then probed lower to 2727.75. The next lower objective was met.

Bouncing through the open attacked 2738.00 before reversing down to fresh lows at 2726.50. Its reaction up to 2735.50 will have attracted reinforcement by printing any higher, targeting 2745.00 or 2748.00.

Back under 2730.00 would otherwise be credible for extending down to 2720.50. More credible than a buy signal, since only a buy signal has attracted reinforcements.

Meanwhile, 4 and almost 5 of the first hour’s opening 15-minute checkpoints overlapped the same relevant level — the 2732.00 opening print. If not for gapping down, this would signal a Dry Cleaners morning and suggest staying away. But having gapped open to a fresh extreme, it represents an anchor that is likely to be revisited regardless of the interim trending attempt.

Next lower objective quickly met.

I described during the pre-open Market Tour that an attempt to isolate the overnight lower lows would likely fail. At least, anything short of recovering 2777.00. I also noted my expectation for the market to once again respond choppily if not poorly to ECB Chair Draghi’s press conference.

So, the ECB policy statement reaction allowed me to label a resistance for fading at 2774.00. Its test held, but a blip-up to 2776.25 quickly resolved down sharply. The open was greeted back under the 2769.00 bias-down signal at 2765.50, in the process of collapsing down to 2745.25. It was eventually probed down to 2741.75.

Failing to hold 2777.00 yesterday had dictated the next lower objective in-play at 2753.50. It’s now being tested as resistance. There’s potential for a bigger corrective bounce, but only a corrective bounce. Back under 2747.25 and 2744.75 would signal the decline had resumed with its next objective being 2733.75, and potentially 2715.00.

Bias-down target’s test is a decision-point.

Stretching the overnight recovery from 2781.50 up to 2792.75 didn’t ensure a post-open recovery. In fact, reversing down greeted the open back down at yesterday’s 2789.00 last-minute low, which offered no support. Attacking 2781.00 reacted up, by enough and in time to invoke the 2785.00 bias-down signal’s grace period.

2785.00 held as resistance to trigger late bias-down. Fresh lows at 10:30 ensured the 2777.25 bias-down target was in-play. And now it has been probed down to 2775.50.

There was no bullish reason to test 2777.00 last week, and no bullish reason to revisit it today. Maintaining its break would next target 2753.50. Under 2776.50 would start to signal that leg had begun.

Otherwise, isolating the 2777.00 test by exiting the bias environment above a relevant resistance could marginalize sellers for the day. Back above 2781.00 would be a start.

First hour is contained by yesterday’s final hour range.

Be cautious with entries and sizing. This being a no-bias environment, there is no required attraction in either direction. And despite having probed yesterday’s late high overnight, yesterday’s final hour range has contained this morning’s opening range. Trending sponsorship is weak-handed, to
the degree there’s any, and not just noise.

Inflections in the chaRTroom have still been productive, albeit short-lived before reversing direction. One thing that continues to be unlikely is volatility remaining heightened, regardless of whether price action is contained within a relatively wide range.