Trading Plan for 10/19

Tuesday’s opening dip seemed aggressive… But that was before the afternoon short-squeeze. Absorbing the fresh lows could have launched a rally. Perhaps it did. But the rally has already met with much resistance, similar to Tuesday morning’s support.

Pattern points… (Setups and technicals)[pay]
Tuesday morning’s failure to trigger bias-down was assumed then to have ended the drop from Friday’s close. There was potential that the drop had refueled buyers for a domino effect targeting 1215.00, the gap back to Friday’s 1221.25 close, a retest of Sunday night’s 1230.00 highs, and then 1245.00.

By slicing to and through the first three attractions in a singular upleg, the last hour’s surge may have undermined its ability to extend up to 1245.00.

Closing above 1221.25 would have made 1245.00‘s test likely. The cash session close was still testing 1221.25. Just closing above  1215.00 at least keeps alive potential to retest 1230.00, where Tuesday’s highs were overbought.

Testing 1245.00 would be even likelier to hold as resistance since Tuesday’s lows left outstanding a test of 1185.00. And when 1185.00 is retested eventually, it will be done by a new downleg, and not in order to form a bottom.

[/pay]What’s Next… (Outlook and opportunities)[pay]
After trending up into Tuesday’s close, gapping down under the afternoon’s 1205.50 low would signal “session-long decline.” That may be the only way to trend down prior to retesting the 1230.00 area.[/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.