Trading Plan for 12/10
[pay]Pattern notes.
Since Tuesday’s session low didn’t print during its last hour, Wednesday was likely to compensate for the delay with a vengeance. Despite having bounced to 1097.50 before the open, a 12-1/2 point drop three hours later compensated for Tuesday’s delay.
The drop was more easily absorbed because it followed a probe of higher highs. This would be bullish if it had been exploited, by a close above a relevant high. That relevant high was 1095.25, and it held as resistance despite being pierced, prodded and probed. Turnabout is fair play, so the afternoon’s bounce is the most recent trending attempt to be absorbed.
The 12-1/2 point sell-off was absorbed because it began from the range’s upper-end. But a 12-1/2 point sell-off from the range’s lower-end would have satisfied selling pressure and neutralized the attraction down to 1078.75.
The morning’s drop was executed without damaging the chart, but that was already rewarded by the afternoon’s bounce. Now there’s no buying pressure left pent-up to help the rally persist into Thursday. And unfinished business remains outstanding below.
Wednesday’s new low didn’t extend down despite sellers having so much time available. Buyers had the same amount of time, and spent it rallying back up to Tuesday’s high, gaining no traction for their efforts. Similar to Friday’s “bottom,” neither is this.
Indicators and Internals.
RSIs were simultaneously oversold at Wednesday morning’s opening low. The timing made their retest likely, but not required. Their retest would have been moot had the session closed above prior highs, which it did not. Having missed that opportunity, now the low’s retest becomes required. RSIs weren’t clearly overbought at the last hour’s high, so its retest isn’t required.
Thursday’s opportunities.
A firm open could still extend up to 1096.00-1098.00 basis Mar (1101.00-1103.00 basis Dec) – perhaps up to 1102.00 (1107.00). There’s plenty of news due in the econ calendar. A firm open might be vulnerable to failing, but it would more likely extend higher. Meanwhile, a break under 1089.00 (1094.00) overnight might greet the open back under 1085.00 (1090.00) to trigger a session-long drop. [/pay]