Trading Plan for 10/10
If Thursday can recover to close higher… then a multi-session rally could be underway. Significant downside levels have been met, and… significant downside levels have been met. That’s about it. There is no completed accumulation pattern, let alone a triggered reversal setup. So, closing higher Thursday would suggest that buyers are retaking control. There is no evidence otherwise..
Pattern points… (Setups and technicals)[pay]
Wednesday afternoon’s rally missed two bullish setups. One resulted already in a reaction down. The other could produce a multi-day decline from here.
The first missed bullish setup was not entering the final hour above the bias environment’s 1655.75 high. It had been probed by 1 point — twice — but dipped just enough just in time to avoid a breakout. Setups that produce every element except the trigger tend to resolve in the opposite direction. So, while that would have extended another 9 points higher to 1666.00, instead it was reversed 9 points to 1648.00.
Similarly, the session formed a bullish Pivot Reversal, and then failed to trigger it. The open had gapped up in a downtrend, reversed to new trend lows, and recovered to fresh session highs. Actually closing back above the morning’s highs would have triggered the setup, but the close was trending back down. Unless Thursday were to close higher anyway, extending down just a little could easily extend down a lot.
There is one opportunity for intraday weakness to be bullish. Sellers gained no traction for their late efforts — closing above the noon hour’s range, if not also within the bias environment’s higher range. Trending down Thursday without gapping down would likely fail, and recover. Using the opportunity to retest Wednesday’s oversold RSIs at 1640.00 could form a durable bottom.
[/pay]What’s Next… (Outlook and opportunities)[pay]
So, gapping down Thursday would get every benefit of the doubt for breaking to new lows and extending the decline sharply lower. Any shallower opening weakness would more likely hold any test of the lows. And probing above Wednesday’s highs would get every benefit of the doubt for launching a rally.[/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.