Trading Plan for 1/7

If Monday’s final hour had been entered any higher… then a significant rally would have been underway. Not that sellers damaged the chart otherwise. But delaying fresh lows much past Tuesday’s open could mean the attraction to new highs is stronger.

Pattern points… (Setups and technicals)[pay]
Monday’s drop from gapping up left no unfinished business above. Not ultimately. Overbought RSIs at Friday’s 1832.00 high were neutralized by the open’s test of 1832.75. Monday morning’s 1823.25 bias-down signal was retested after being probed down to 1817.25.

Monday’s drop almost created unfinished business above. Entering the final hour above the bias environment’s 1824.75 high would have targeted fresh session highs above 1832.75. But 1824.75  was only being overlapped.

Reacting down to 1820.00 broke key levels too late to signal fresh lows in-play. Fresh lows are likely so long as Tuesday’s open doesn’t bounce above Monday afternoon’s 1826.00 high. And fresh lows could extend through 1816.00 to 1803.00. But recovering 1826.00 through Tuesday’s open would delay fresh lows until last week’s high were attacked or probed.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Oversold RSIs left outstanding at Monday’s low don’t require being retested within any time frame. But they’re likely to be retested early Tuesday in place of gapping up. Testing them overnight before gapping up Tuesday would only reinforce the rally’s potential.[/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.