The First Trade… Holding up is not enough.
Proper context can start the day with a solid win and make all the difference.
CHARTROOM LINK
(pre-open Market Tour begins at 8:55 ET)
Through the prior close…
Wednesday’s 21-point rally from its 2144.00 low had recovered the morning pullback and also its gap up, then 61.8% of last Friday’s range at 2164.00. No unfinished business was left outstanding, below having fulfilled the morning’s downside objective at its low. The afternoon’s no-bias environment was essentially maintained, despite testing its bias-up signal and then breaking higher five minutes before that would normally be acceptable. But the late break was triggered by a headline — not by excessive optimism — and relevant levels the break recovered were maintained through the close. Still, trending did not gain traction.
Overnight action’s new info…
The rally’s momentum eventually resumed, carrying price slightly higher to 2167.00 before midnight. That happens to be this morning’s bias-up signal, which is calculable resistance. Narrow ranging at the high started drifting back down ahead of Europe’s opens. That extended eventually to a 3-point deficit from yesterday’s cash session close to 2160.75.
If, then…
The overnight high was the first probe into last Thursday’s range since Friday’s break under it. The gap up that was indicated initially overnight must be recaptured pre-open in order to resume the rally this morning. That’s both because gapping up would dismiss the rally not having gained traction yesterday afternoon, and because the rally has been tenuous anyway. Add to this that natural resistance at last Thursday’s “higher prior lows” are not being tested. The alternative isn’t necessarily for the trend to reverse back down, but there is plenty of room below for backing-and-filling.
First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 under 2163.00 would be unlikely to trigger the 2167.00 bias-up signal at 10:15. Exiting the open under 2155.75 would be likely to trigger the 2157.50 bias-down signal. Exiting the open above 2170.00 would be likely to trigger the 2167.00 bias-up signal.