Trading Plan for 11/18

Last week’s trend change signal was similar to this week’s. A close under the prior low one day, and a failed attempt to recover it the next. A temporary bounce is still possible, but there’s only one path to follow. Almost any other price action would point down. [pay]

Pattern points… (Setups and technicals)
Tuesday’s close under it had signaled a new trend change, similar to last week’s signal, but bigger. Wednesday’s test of 1180.00-1181.00 held as resistance to avoid invalidating the signal.

The one path higher is for Thursday’s open to gap up above 1180.00-1181.00.  It’s too late for the recovery to produce a durable rally. And the “path higher” might only be marginally higher. But it would likely marginalize sellers for the day and avoid extending the trend down.

Not gapping up would not be bullish. It might not be immediately bearish – last week’s trend change didn’t extend down immediately on its third day, but the fourth day made up for lost time. But Thursday morning’s only reliable path higher would immediately resume Wednesday’s opening rally attempt.

Wednesday’s session traded entirely in positive territory without gaining traction. Monday’s “ineffectual pessimism” was similar, except it began by gapping up. A negative resolution might also differ by not gapping under prior lows and extending down sharply. Nevertheless, the alternative to bouncing should resume the decline – ranging sideways again Thursday is not likely.

What’s Next… (Outlook and opportunities)
1180.00-1181.00 should not be probed overnight unless the open will extend higher. Wednesday’s weak-handed buyers were not exploited by patient sellers. And 1180.00-1181.00 resistance was chipped away throughout the day. Its recovery is not required, so another attempt to recover it would intend to probe its next resistance.

Otherwise, not probing 1180.00-1181.00 – or failing from its probe anyway – would not initially target a retest of Tuesday’s 1171.00-1172.00 lows. The more important question would be whether their break ends the decline, or begins a much larger one.[/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.