Trading Plan for 11/16

Monday night’s lows overshot… the 1242.00 lower target left outstanding at the close. Tuesday’s post-open dip did not, holding 1242.00 as support. The question is whether the afternoon’s reaction up from 1242.00 corrected the drop to resume the decline, or whether the reaction up has resumed the rally.

Pattern points… (Setups and technicals)[pay]
There was no requirement to test 1262.00 Tuesday, but there was potential to test it for having recovered 1242.00 through the open. Its 9-point reaction down to 1253.25 confirms something important happened at 1262.00.

But was the reaction down bearish, or bullish?

After probing the afternoon’s 1260.25 bias environment peak, a fresh high printed during the next timing window up to 1262.25. Despite the fresh high, the session closed back under their 1256.00 interim low. This would be bearish.

This would be bearish — signaling that momentum had reversed down — except that 1256.00 had not been touched yet 3-5 minutes before the cash session close. Weak hands sponsored the late 9-point dive.

Strong hands would have touched that relevant price point further before the close. If not for impatient sellers, 1256.00 would not have been touched at all. In fact, the dive touched 1255.00, which fulfilled the target put in-play by breaking under 1259.50.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Tuesday’s late dive was not strong hands reversing the trend down. It was weak hands fulfilling their selling pressure. Strong-handed sellers could still take control overnight or at Wednesday’s open to dictate a new downleg. Almost any further weakness under 1253.00 could gain traction, but a break under 1246.00 (no longer 1242.00) would signal a bigger drop underway. Meanwhile, a bounce has room up to 1259.50 before signaling that Tuesday’s recovery was extending up to 1278.50.[/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.