Trading Plan for 10/28
Cut down in its prime, and then again later… Wednesday’s session-long decline setup controlled the morning, but the afternoon controlled it. Regardless, it remained influential, if inverted. The change in its resolution suggests bigger shifts underway.[pay]
Pattern points… (Setups and technicals)
Wednesday’s gap open under Tuesday afternoon’s low triggered a “session-long decline” setup. It has a high probability for printing its session low during the last hour, often ticking down into the close. Exceptions don’t simply range sideways, but invert and tick higher into the close. Wednesday’s setup clearly inverted by recovering 1173.00.
The 1167.75 low stopped just short of touching last Thursday’s 1167.25 prior low. It was expected to recover any intraday probe anyway, since closing under it would have signaled the trend reversing down. A trend reversal wasn’t likely in the context of a pre-FOMC pullback.
But impatient buyers prevented probing 1167.75. Coming within 2 ticks of touching it does not complete a test, so its eventual retest is likely. And if the current bounce is any more productive first, then 1167.75‘s eventual retest as support will likely fail.
First things, first. The session-long setup tends to extend its closing trend into the following session, regardless of its initial direction or its eventual resolution. Patterns in-play Wednesday afternoon are targeting 1182.50. And since Wednesday’s session-long decline never did turn positive, buyers never did gain traction.
What’s Next… (Outlook and opportunities)
Gapping up is the only way to maintain higher prices Thursday. So, extending higher without first gapping up would be vulnerable to reversing down intraday, presumably from testing 1182.50. The initial objective would be to actually test 1167.75, and any lower would next target 1160.00. There is no unfinished business above, so extending above 1182.50 would have little resistance along the way to fresh 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.