Trading Plan for 10/10

If Tuesday’s hold-short setup doesn’t extend down overnight… then what would prevent Wednesday’s open from compensating for the delay? Closing under the most recent consolidation’s equilibrium with lower targets outstanding merited considering whether to maintain a short position overnight. That can be thwarted, but not easily.

Pattern points… (Setups and technicals)[pay]
Similar patterns that appear consecutively tend not to resolve similarly. That was proved once again Tuesday afternoon. Or, was it?

The comparison is between Monday and Tuesday’s bias environments both exited while testing the noon hour’s high, and both barely missing entering their final hours any higher. Monday then surged momentarily in a false break that was reversed into the close. Had Tuesday also surged, then it would not have been only a false break.

In fact, Tuesday’s setup broke lower. But that doesn’t necessarily make it different from Monday’s resolution. While Tuesday’s break did probe fresh lows, it did not trend down any lower. Monday’s break to fresh highs did not trend any higher.

Each setup is still tracking a false break resolution. In order for Tuesday’s similar setup not to resolve similarly, its breakout cannot be false. Rather than recover from breaking lower Tuesday, Wednesday should extend the drop.

[/pay]What’s Next… (Outlook and opportunities)[pay]
The next lower likely objective is 1432.00 (an attack on 1400.00 below there). It is in-play so long as Wednesday’s open doesn’t reject Tuesday’s drop by gapping up above the afternoon’s 1441.50 high. Such significant buying pressure at that window would suggest that the drop since Monday’s open was the mother of all false breaks. Its short-squeeze would target new highs.[/pay]

Look for at least one update overnight or ahead of the Morning Market Tour… My thoughts on the day’s econ calendar are linked here.