Trading Plan for 12/7

Another overnight dip, another intraday recovery. But still no retest of overnight highs. It has been satisfied by proxy, but intraday potential remains alive to probe the high. For now.[pay]

Pattern points… (Setups and technicals)
Monday’s hard-fought battle slowly and steadily recovered to attack 1225.00. Unfortunately, slow and steady wasn’t going to win that race. Just ticking higher wasn’t inappropriate for a recovery. But it needed a surge to follow soon after 2:30. Into the last hour would have sufficed.

Buyers never gained traction to break beyond Friday’s highs. Monday was an inside day. And since the intraday trending was up, its sponsorship was weak hands. This further confirms that testing this area will ultimately resolve in a new downleg.

Meanwhile, holding 1222.00 through the close kept alive potential to test the highs up to 1227.00-1228.00. There is room to fluctuate around 1222.00 down to 1220.00 before a detour down to 1216.00 becomes likelier, first. Closing under 1216.00 would signal a new trend reversal.

What’s Next… (Outlook and opportunities)
The room down to 1220.00 is already being tested after Monday’s close (highlighted blue). Although 3-minute RSI is reaching new oversold lows, 1-minute RSI is diverging positively. Recovering 1222.00 would now be that much more bullish, at least for probing fresh highs.

But a retest of the high is not as reliable as the consequence of failing to probe the high, or the likely reaction, which is a new downleg larger than November’s.[/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.