Trading Plan for 11/14

[pay]Pattern notes.
“Pivot Reversal” is a gap up in a downtrend that closes above the morning’s low, interrupted by a new trend low intraday (the inverse is true for an uptrend, and always requires rising volume). The setup is often reliable for 2-3 days of follow-through, but not permanently. There is no single most likely path for retracing back down to the origin’s eventual retest.

Thursday’s price action followed the Pivot Reversal template almost perfectly. Almost because nothing is actually perfect. And also because the last hour’s 55-point surge to nearly ESz 914’00 borrowed heavily from the 2-3 day follow-through. Rather than leave the buying pent-up where it could attract price higher, Thursday’s last hour might have already cashed it in. Regardless of intraday action, closing negative Friday would mean the follow-through is done.

Meanwhile, there is room down to 882’00-886’00 as support no matter the resolution. Its test overnight or early Friday would have the best chance at launching at least a retest of Thursday’s high. Rallying first would make the eventual dip less likely to hold.

Although my long-standing objective was satisfied Thursday by retesting recent lows at 830’00-835’00, my expectation for lower lows has not changed. Despite the overtly optimistic reaction from under 817’00 – or because of its relentlessness – buyers are still too optimistic to have allowed sellers to be flushed out thoroughly. A day or two of closing under prior lows would be able to produce a bottom. Thursday’s “V” bottom low was too far under prior lows to be their retest, so it requires its own retest eventually.

Indicators and Internals.
RSI quickly came off of oversold after Thursday’s close. But I would take with a grain of salt any initial divergence that might be signaled at Friday’s open.

Friday’s opportunities.
The economic calendar finally comes alive with two items at 8:30 and two more at 10:00. This being a Friday, an initial bias in place past these news items will likely remain in place well past the noon hour.[/pay]