Trading Plan for 10/25
Wake me when it’s o- oh, okay… We knew Friday’s pre-open surge and its opening gap up would be rejected. But it was surprising by how little. Were sellers saving their big guns for the new week?[pay]
Pattern points… (Setups and technicals)
Friday’s pre-open surge failed just 1 tick short of the 1181.25 bias-up signal. The post-open surge stopped 2 ticks short. Neither peak was sufficient for putting into play a test of the 1172.00 bias-down signal. In fact, the balance of the day ranged very narrowly until the close.
Despite spending the entire day in positive territory, Friday’s narrow ranging confirms that Thursday’s late-afternoon bounce did not gain traction. This was signaled by only retracing the early-afternoon’s drop. Counter-intuitively, gapping up Friday instead of trending higher was actually further confirmation that buyers had not gained traction.
Similarly, Friday’s last-minute surge from 1178.00 to 1181.50 was just another marker. Delayed trending is sponsored by weak hands, who are bullish in this case, which is bearish from a contrarian perspective.
What’s Next… (Outlook and opportunities)
Friday’s last-minute surge finally neutralized any attraction to retesting the 1181.00 pre-open high. There is no unfinished business above to attract price up at Monday’s open. This doesn’t equate to being a sell signal – there was no unfinished business above after Thursday’s close, yet Friday hardly looked at turning negative.
Early strength should be rejected early upon testing 1184.00-1187.00 if sellers will regain control intraday. Delaying a reversal down for too long would encounter much support from Friday’s narrow extended ranging around 1177.00-1178.00.
After surging into Friday’s close, gapping down Monday under Friday afternoon’s 1176.25 low would trigger a “session-long decline” setup. A gap down would leave no unfinished business above.[/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.