Trading Plan for 1/21

If Wednesday”s open doesn”t gap down under relevant support… then the morning should be very productive to the upside. The afternoon might hesitate, or run into trouble, ahead of the ECB policy statement.

Pattern points… (Setups and technicals)
Tuesday afternoon”s rally gained traction for its effort. The bias environment was exited above the noon hour”s high, and the final hour was entered higher. Typically, the reward to Tuesday”s buyers is control of the next morning”s bias environment. 

Trending higher Wednesday morning can be invalidated by gapping down sufficiently. A pullback has room down to 2009.50 before suggesting the recovery”s momentum is losing traction.

An overnight dip can”t be discounted, but it isn”t required. The current environment”s optimism remains in-check — the afternoon”s recovery peaked pessimistically1 tick short of touching natural resistance at the 2020.00 open”s gap, and that reacted down in two pre-close dips.

None of which interferes with this rally still being only a temporary correction. “Temporary” doesn”t speak to duration, only to durability — last week”s lows will need to be retested, not for the sake of retesting them, but because they lacked integrity for forming a durable bottom.

What”s Next… (Outlook and opportunities)
The annual State of the Union address has no bearing on the market. But it has distracted attention from the BOJ policy statement due overnight.