Trading Plan for 12/13

If Tuesday’s breakout was valid… then why was Wednesday’s fresh high rejected? That’s not a sell signal, and it can resolve up. But meanwhile it has potential to evolve into a top.

Pattern points… (Setups and technicals)
Wednesday’s session closed flat with Tuesday’s cash session close. This followed a new high intraday, which was triggered by the noon hour’s FOMC news. While there is nothing bullish to not extending a fresh high, it is not necessarily bearish.

Also not necessarily bearish is holding a test of 1427.00 (basis Mar, 1433.00 basis Dec) for the second consecutive session. Closing above it would have confirmed Tuesday’s breakout close. Holding its test instead suggests that buying pressure is peaking. Resuming the rally would require another dip and its recovery, presumably forming some sort of accumulation pattern.

There was nothing bullish about leaving unfinished business below at 1418.00 (basis Mar, 1424.00 basis Dec). Oversold RSIs at Tuesday’s 1417.25 (basis Mar, 1423.25 basis Dec) low still require a retest, too. They will continue trying to attract price down, but their attraction(s) can be neutralized overnight.

Also not bullish was reversing down after the FOMC detour up touched 1432.00 (basis Mar, 1438.00 basis Dec). That was the range of noise above 1427.00 (basis Mar, 1433.00 basis Dec), and overbought RSIs from its first test were neutralized. There is no unfinished business above. And that’s not bullish.

What’s Next… (Outlook and opportunities)
1418.00 (basis Mar, 1424.00 basis Dec) etc. can be tested overnight and produce a reaction up that greets Thursday’s open in rally mode. That’s why no hold-short setup was considered at Wednesday’s close. But rallying overnight would still be less likely to gain traction without first testing  1418.00 etc

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.