Trading Plan for 10/7

If Monday afternoon’s break were one minute earlier… then one of the most bearish templates would have triggered. Price overrules timing, so the setup is still credible. But it is also vulnerable to being derailed by almost any updraft.

Pattern points… (Setups and technicals)[pay]
There was no bullish reason to retest last Monday’s 1666.75-1670.00 low. It was retested already on Thursday. And it’s not as if the test was arbitrary noise from some noon hour rogue leg. Monday’s open gapped down to 1669.00, and the cash session close returned there after midday probing above 1673.00 to 1678.00.

Monday’s 1669.00 close was a new low close for the decline. It was contained within two prior sessions’ ranges, which undermines fresh lows from gaining traction. But it does not prevent fresh lows. Remember, buyers gained no traction Friday and there is no unfinished business above.

So long as bounce limits hold, sellers get every benefit of the doubt — doubt that is lurking nearby. One doubt is the timing of the 1675.75 sell signal, which did not break until a moment after the 3:10-3:20 timing window had lapsed. Another is the eventual close under 1670.50, which would have merited hold-short 3 minutes earlier, but may have borrowed too much future selling pressure by extending already to 1667.00.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Extending down would next target 1656.50-1658.75. Otherwise, bounces should hold the 1676.00 area. But having trended down into the close, gapping up above the bias environment’s 1676.00-1679.50 high would trigger a session-long rally.[/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.