Trading Plan for 2/18
[pay]At the close (How the prior session ended)
Wednesday afternoon’s price action was like watching paint dry. The entire session was already narrowing its range into a Symmetrical Triangle. Even FOMC Minutes couldn’t push price beyond a 3-1/2 point range one hour later.
The last half-hour did finally print a fresh afternoon high. Momentarily. And not until after the 3:10-3:20 window barely firmed. That was retraced back down to the 1096.50 interim low where a pullback limit had just been touched.
Probing under the 1096.50 pullback limit by more than 2 ticks would have triggered a sell signal. It would have been the session’s first sell signal (other than a 1-minute RSI negative divergence before the FOMC news) but the dip stopped 1 tick short. The market then ticked higher after the cash session close to touch the 1100.00 overnight high.
Pattern points (And technical influences)
Tuesday’s test of the 1093.00-1095.00 target satisfied a lot of buying pressure. Attempts to extend higher both overnight and intraday were retraced. This is despite gapping up after a session-long rally. It’s not a sell signal, but it doesn’t reflect buyers gaining any new traction.
3-minute RSI avoided overbought and oversold territory. So did 1-minute RSI, mostly. That doesn’t help the rally prove it is more than a correction. Oversold RSIs could be trapping sellers. Overbought RSIs could be reflecting strong buying. But RSIs hardly did either.
Meanwhile, the pullback from overnight highs created room to absorb future buying pressure. Left outstanding, that could have helped to resume the rally at Thursday’s open. But its attraction was neutralized after Wednesday’s close.
Bottom line (My underlying premise)
The morning’s econ reports are going to be tricky. They can also be helpful to resuming the rally. A strong open Thursday would be credible for extending sharply higher through the morning, because such strength at this stage would mean new sponsorship had arrived. The old sponsorship is done, so a weak open would mean reinforcements weren’t coming. Indeed, maintaining a break back under 1093.00-1095.00 would mean the corrective bounce had likely ended.[/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.