Trading Plan for 12/5

If Thursday doesn’t gap beyond either end of Wednesday’s range… then trending intraday beyond either end would be difficult. But trending to either end, and reversing sharply from there, would be likely.

Pattern points… (Setups and technicals)[pay]
Selling pressure was already fulfilled before the Beige Book release, having fallen 8 points under 1787.00. Greeting the report from above 1794.00 would have been bullish. So, it’s not coincidental for the afternoon’s rally to have reached 1794.00 and then to have held it as resistance.

The recovery from 1777.75 was not accumulative. The three-day setup of failed morning rallies did extend its string to four days. The afternoon’s bounce is a product of the decline having reached its target. Notice that its reaction up failed to close positive.

The afternoon bounce’s higher highs and higher lows was a singular upleg. And it retraced as much of the morning’s peak as possible without gaining any traction for the effort. Think about that — the vast majority of patterns measure 4-6 points high, but the current pattern now forming from Wednesday afternoon’s rally is 22 points high. That pattern’s breakout in either direction would be significant.

[/pay]What’s Next… (Outlook and opportunities)[pay]
The market did dodge a bullet by not closing under 1780.00 area, which would have triggered a trend change. There may be another bullet coming, since oversold RSIs left outstanding at the low require a retest. And retracing Wednesday afternoon’s rally could target at least 1767.00. Extending higher first could probe last week’s highs before launching a new downleg.[/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.