Trading Plan for 1/22

If the reaction to ECB”s QE isn”t bullish… then Thursday”s open is probably indicated to gap down sharply.

Pattern points… (Setups and technicals)
Wednesday”s session did everything it could to facilitate a favorable reaction to Thursday”s pre-open ECB statement. At least, to facilitate an initially favorable reaction targeting 2041.00-2044.00: 

— Tuesday afternoon”s buyers got the reward they were due by controlling Wednesday morning”s bias environment, but no more.
— Reacting down into the afternoon bias environment”s low kept optimism in-check.
— And upward momentum from the last 60-90 minutes” rally will greet Thursday morning”s news.

A favorable reaction could still be reversed in the afternoon. But if the initial reaction isn”t favorable, then a reaction down to last week”s lows is probably underway. Wednesday”s closing action rallied, and the bias environment contained the afternoon”s 2016.25 low, so gapping down under it would form a “session-long decline” setup.

What”s Next… (Outlook and opportunities)
Although the ECB QE size was floated Wednesday morning, that was only a leak, perhaps a trial balloon. And it was criticized. Markets held up just for knowing with much greater certainty that some sort of program would be announced within hours. Presumably, the actual total won”t be lower. But even if it is higher than what was leaked, the pattern”s timing doesn”t change.