Trading Plan for 12/9
[pay]Pattern notes.
The open’s gap down under Monday afternoon’s low signaled a session-long decline. The setup calls for the session low to print during the last hour, which then often ticks down into the close. When the last hour does not contain the session low, the next session tends to compensate for the delay – with a vengenace.
A 10-point bounce off of Tuesday morning’s 1087.75 low was retraced to 1088.75, within 1 point before the last hour. Just 1 point. That last point may have been another 10, since the next hour only ranged sideways. Bouncing from so close to a target without first testing it is optimism. So was the last-minute dip that stopped within 1 point of 1088.75.
Considering that the price only trended down since noon, it’s interesting to find so much optimism at its late lows. Perhaps it is no longer our little secret that Friday’s low wasn’t a bottom. But its bearish consequence doesn’t yet seem widely appreciated.
Under 1086.00-1087.00 through any relevant timing window could quickly extend down to Thanksgiving’s critical levels at Nov 27’s 1078.75 open, or even to its 1067.25 pre-open Globex low.
Indicators and Internals.
RSIs were simultaneously oversold at Tuesday morning’s low. Its low already requires a retest due to the open’s session-long decline setup, so this is further confirmation. It also characterizes the interim buying as being relatively weak-handed.
Wednesday’s opportunities.
The sooner that sellers can get their taste Wednesday, the more time available for a recovery to gain traction and launch a two-day corrective bounce. Opening lower wouldn’t require a recovery, especially if Thanksgiving Friday’s lows (1078.75, 1067.25) aren’t tested in the process.
Thanksgiving Friday’s lows will probably attract price down into the afternoon if Wednesday’s open can’t get above Tuesday’s 1097.50 high. Gapping up above Tuesday’s high would buy a little time, while extending only slightly higher to test 1103.00 before ultimately reversing down.
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