Trading Plan for 11/15
That answers that! Yesterday in this space I asked whether sellers were about to make up for lost time. The two days since triggering a trend change had not been very productive. Thursday night’s 19-point drop was a good start. Now Monday’s open is poised to keep the pressure on. [pay]
Pattern points… (Setups and technicals)
Sellers barely broke a sweat during Friday’s drop, as 3-minute RSI reached oversold levels only twice. Each time went on to form a positive divergence, and both were ignored – i.e. fresh lows printed before recovering above a prior relative high. This tends to reflect much bigger supply coming down the pipeline.
The decline’s next targets were 1193.00 and 1180.00-1182.00. Thursday night’s low touched 1193.00, neutralizing its attraction so a recovery was free to begin. The only reason to retest 1193.00 was if the market intended to break lower. Friday’s cash session did retest it down to 1191.50.
Actually, 1193.00‘s retest could have trapped shorts if the close had recovered 1199.00. But the reaction’s bounce held its test. Repeating that test at Monday’s open would be likelier to gain traction , and eventually test 1217.00. Meanwhile, the drop underway is next targeting 1180.00-1182.00.
What’s Next… (Outlook and opportunities)
Tuesday’s trend change signal need not produce a multi-week, extended decline. Its next objective at 1180.00-1182.00 is not too much further under Friday’s 1191.50 low. And it would qualify as a complete pullback, allowing the rally to resume.
But not if 1180.00-1182.00‘s test were delayed until a bounce first tests the 1108.00 1208.00 area again, or to 1217.00. Either would prematurely neutralize any remaining attraction above, and allow another larger downleg to begin.
And dropping first to 1180.00-1182.00 need not recover. If tested early Monday, then it had better push back up early, too. It’s a major target, but it’s not major support. Its test could easily slice through on the way to 1166.00.[/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.