Trading Plan for 10/6
[pay]CHARTROOM UPDATE: We’ll retry Webex Wednesday. As always, simply use the link on the chartroom page. Overnight I am retesting the original vendor to assess whether their audio has improved. Click here to view overnight action.
About that close (How the prior session ended)
Tuesday afternoon had been resisted by its 1155.75 bias-up signal. It was probed momentarily when the no-bias environment lapsed at 2:30. It was then recovered by new highs up to 1159.00. But the last half-hour slid to close back under 1155.75.
Meanwhile, Tuesday’s last 90 minutes also violated pullback limits. The session-long rally had not spent more than 2-3 minutes and/or 2-3 ticks under any limit previously. Suddenly two were probed deeply.
The late pullback limit tests reflects weak-handed sponsorship probing the afternoon’s high. Those same highs mean buyers were productive, but closing back under 1155.75 resistance means they gained no traction for their efforts.
Pattern points (And technical influences)
Since Tuesday’s high lacks integrity, retesting it from below would likely form a Double Top, targeting 1161.00. The late slide still held within the afternoon’s range. Lower lows are still needed for a retest of Tuesday’s highs from below.
A move to lower lows is in-play. Tuesday’s late reaction down from 1159.00 triggered a sell signal targeting 1153.50. That would barely probe the afternoon’s lows, but its test has room down to 1151.75-1152.00 overnight as noise around the target. Early Globex trading has so far reached 1154.25.
Regardless of the overnight dip’s depths (say that five times quickly), its recovery to test 1159.00 is likely. New price extremes that print during a session’s last hour don’t resolve in reversals. And Tuesday’s late surge began with a new high in the last hour.
Bottom line (My underlying premise)
One caveat to a deeper overnight dip: Wednesday’s open should recover 1153.50 to confirm sellers were absorbed. And extending under 1151.75 would start to gain traction for trapping Tuesday afternoon’s buyers, and rejecting their higher 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.