Trading Plan for 10/28

[pay]Pattern notes.
Tuesday’s last hour selling stopped 1 point above the afternoon’s 1057.25 prior low. And that was 1 tick above the morning’s low. (The rising lows are defined by the nearby chart’s dotted orange line.) Each interim bounce was relevant, and not just arbitrary noise, having retraced at least 61.8% of the prior drop. In each case, a retest of the prior low is in-play, simply because the trend remains down.

The margin between prior low and subsequent low reflects optimism. Inappropriate optimism, since a bottom requires actually probing under the prior low. Almost no recovery attempt prior to that would be credible. And, as seen Tuesday afternoon, almost no recovery attempted prior to that can succeed.

An exception is to gap up above the interim high. The objective of immediately recovering Tuesday afternoon’s 1065.50 high at Wednesday’s open, would be to probe above its prior high, which is Tuesday morning’s 1069.25 high. This particular interim pattern would target 1071.00, which is near enough to higher prior lows at 1072.00 to also expect its retest before the decline resumes.

Meanwhile, the trend remains down, targeting 1051.00-1054.00 to launch a bigger bounce. That, or else 1051.00 gives way to a much deeper and steeper decline. The decline’s next downleg should be similar in slope and degree compared to Monday’s late-morning plunge.

Indicators and Internals.
RSIs were simultaneously oversold at Tuesday morning’s low, requiring its eventual retest. They were higher lows, predicting a bounce which played out quickly. The bounce has probed a prior high, so it has already been productive.

Wednesday’s opportunities.
The econ calendar promises to keep the market uneasy through the opening sequence. Immediately recovering above 1065.50 would trigger a bounce for refueling sellers. Probing the 1069.00 area before the open would make 1065.50 a sell signal. Otherwise, the trend remains down.[/pay]