Trading Plan for 1/25

Momentum of truth. Friday’s 1288.00 high was retested, including 1289.00. Closing back under 1288.00 robbed buyers of their traction. It’s almost time for last week’s trend change signal to prove itself. [pay]

Pattern points… (Setups and technicals)
Objectives come in various forms. Prior highs (and lows), targets, overbought (and oversold) RSIs. Buyers lose traction after probing an objective intraday, and failing to close above it.

Monday had two or three objectives. The first was tested overnight at 1285.00 and retraced into the open. Then 1288.00‘s test held as resistance into the cash session close. So did 1289.00‘s post-close test.

Each piece of unfinished business or attraction above was probed. All held through their respective close. Monday’s last high was itself purely a product of the last half-hour. This is not where moves begin or resume.

Closing above 1286.50 does threaten to end last Wednesday’s trend change signal. It’s too late to be invalidated. But closing above its 1291.00 prior high would end its influence – influence that has been inhibiting a bigger recovery.

1291.00 can be probed intraday. Closing above it – or above any other prior high probed intraday, like 1295.00 and 1296.25 – would signal another rally leg underway (targeting 1310.00 area and 1324.00). Closing back under 1286.50 would all but seal a top.

What’s Next… (Outlook and opportunities)
Gapping up Tuesday above 1291.00 would be credible for extending higher to test the 1295.00 prior high, and possibly also probe 1296.25. The earlier, the more time available to reverse down. Otherwise, Monday’s late-afternoon drop can resume under 1285.25, targeting 1280.25 and 1277.25.[/pay]

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.