Trading Plan for 11/24

If WedEX had triggered this week… then it would have triggered “passively bearish.” But Wednesday”s inside day disqualified the setup. Friday”s price action would have fulfilled it. Trending down at Monday”s open would suggest the morning will fulfill the signal, too… Be sure to join us for the Saturday Review at 9:30 ET by clicking here.

Pattern points… (Setups and technicals)
Friday”s expiration session trended down 17 points from the open, and until entering the afternoon bias environment. The duration is typical of Fridays — their initial bias tends to persist at least through the noon hour. 

But we don”t often see the early bias portrayed so obviously. Even the Fridays that do trend, don”t often trend so substantially. Thursday night”s 20-point rally created a lot of space for a counter-trend drop, without requiring its sponsorship to break under support.

And that”s the moral of the story. Despite Friday”s intraday drop being sizable, it didn”t damage the uptrend. Not only did its sellers fail to break under a prior low, their efforts only came within 3 ticks of Tuesday”s high.

Of course, there is a little more to that story. Substantial and relentless downtrends that stop optimistically short of touching natural support make the uptrend difficult to extend. Recovering immediately could find that optimism sorely missed, just when it is needed most — trying to exceed Friday morning”s high. Or, the difficulty could be worked out patiently by consolidating, or by a little deeper dip that stretches Friday”s rubber band a little tighter. 

What”s Next… (Outlook and opportunities)
Regardless, Friday”s opening gap will need to be retested at some point. Either directly, or by proxy after forming a more complex pattern above prior highs. That doesn”t prevent an immediate drop, but it prevents an immediate drop from becoming a durable downleg. Friday being a new high close also prevents an immediate drop from extending into a durable downleg — an immediate drop is possible, and could be substantial, but would be only corrective.