Trading Plan for 1/30

If Thursday”s Pivot Reversal doesn”t extend the recovery immediately… then it”s a failed setup. A failed setup, after fully forming, typically becomes as bearish as it had potential to be bullish..

Pattern points… (Setups and technicals)
Thursday”s recovery was a thing of beauty when it came to both fulfilling and trapping sellers. Wednesday”s sellers got control of Thursday morning”s bias environment, during which they held tests of lower targets. But their timing had already suggested they were weak-handed sellers that wouldn”t gain traction.

That”s half the equation to a recovery — fulfilling and trapping sellers.

The other half of the equation is to reverse the trend back up, and we had to give buyers leeway for that. The afternoon”s rally was still overlapping the relevant level when it was time to override the no-bias signal, but we trusted it and it extended 18 more points anyway. Extending high enough could have overridden the late start, the relevant level was once again being overlapped when exceeding it would have been decisive.

Finally, the recovery did extend a lot, as was expected if the recovery happened at all. But it stopped a little short of touching its minimum objective. At least the minimum objective wasn”t tested and rejected. And at least the morning”s high was exceeded, which formed a bullish Pivot Reversal setup.

But Friday”s open must still prove that Thursday”s upward momentum has gained traction, and not just refueled sellers. If sellers are refueled, then they”ll be happy to soon learn that support has been chipped away.

What”s Next… (Outlook and opportunities)
This being a Friday, the morning”s bias signal tends to persist through the noon hour. Trending is difficult to begin, and more difficult to stop.