Trading Plan for 2/26

If a top is premature… then Tuesday’s drop extended enough to attack or retest Monday’s highs. And a top should be premature. But not already rallying at Wednesday’s open would allow the morning to back-and-fill even deeper.

Pattern points… (Setups and technicals)[pay]
Tuesday’s bias environment exit was testing the noon hour’s lower-end as resistance, and so was the final hour’s entry. But the 3:10-3:20 timing window did trend down to fresh afternoon lows. That’s not very bearish, since it doesn’t assure probing lower lows Wednesday.

It’s not bullish, either, but that doesn’t mean Wednesday’s open won’t resolve up immediately.

Lacking fresh lows at each afternoon checkpoint keeps the door open to reversing up immediately. But gapping up is essentially the only immediate path higher, without having gained traction at the prior close. Tuesday’s last-minute surge prevents a gap up from forming a “session-long rally,” but it would still be a bullish morning.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Gapping up Wednesday too shallowly could at least create room to absorb selling pressure, before the rally’s next opportunity to extend in the afternoon. Triggering an early sell signal would get a benefit of the doubt, but not much.[/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.