The First Trade… Another overnight plunge.
Proper context can start the day with a solid win and make all the difference.
Enter the chaRTroom here
(pre-open Market Tour begins at 8:55 ET)
Through the prior close…
Monday night”s rally back to last week”s ~2105.00 highs wasn”t repeated intraday Tuesday. Instead, a post-open decline finally bottomed upon attacking 2087.00 during the afternoon bias environment. The session ended between the prior session”s 2091.00-2093.00 futures and cash closes.
Overnight action”s new info…
An extremely narrow 2-point range around 2093.00 suddenly surged at Europe”s opens. Peaking abruptly at 2098.50, and consolidating briefly, then sliding suddenly down to 2093.00 — that was just misdirection. Moments later, a plunge was testing 2082.00, where Sunday night”s plunge was first consolidated. That was 3 hours ago, during which an Expanding Triangle has formed between 2080.00-2087.00.
If, then…
A lot of patterns are at work here, from the overnight failed surge and the plunge segment, to the Expanding Triangle and potential gap down.
The failed surge”s placement occurred at a 61.8% retracement back to yesterday”s pre-open highs, and it”s the most bearish influence, with potential for a fresh low at 2077.50.
The plunge segment”s line in the sand is 2090.75, which is both an attraction to a retest, and a signal to complete recovery.
Expanding Triangles are often reversal patterns, and exceeding its room for noise above at 2090.50 would start to signal the reversal underway, but meanwhile there is room for noise below it to 2077.50.
Gapping down but back above 2088.00-2090.00 — or not gapping down, at all — would be likely to repeat the recent pattern of isolating overnight drops.
So, rallying above 2090.00 through the open, if not already recovered above 2094.00 into the open, would keep the market on-track for probing new highs. Not yet recovering 2089.00 or failing to maintain a probe above it would make a probe under overnight lows likely.
First Trade…
Exiting the open at 9:45 above 2090.25 would be likely also to avoid triggering the 2089.00 bias-down signal at 10:15. Exiting the open under 2086.00 would be likely to trigger bias-down. Exiting the open above 2096.75 would be likely to trigger the 2095.00 bias-up signal.