Trading Plan for 2/6

If Wednesday’s low were any lower for any longer… then a bottom could have formed. That is, if it were then recovered. Instead, it was too shallow and too brief. Not that probing any lower for any longer would have been recovered, anyway.

Pattern points… (Setups and technicals)[pay]
Excessive optimism defined Wednesday almost as much as it defined Tuesday. But the afternoon’s retest of the morning’s high, and the failed bias-up signal, were almost irrelevant compared to the morning’s retest of Monday’s 1732.00 low.

Wednesday morning’s volatility had included wide milti-point swings up to 1747.00 and 1749.00. Neither prevented a morning drop to 1732.00. In fact, the retest of Monday’s low was already required eventually based on Monday’s own pattern. Tuesday’s pattern made it likely to happen Wednesday.

Retesting Monday’s 1732.00 low could have formed a bottom, if any time were spent probing under it. While simply touching it did neutralize its attraction, only touching it created a new requirement to retest it.

So, there is little change to the ongoing pattern. It is briefer, but otherwise similar to last week’s consolidation that broke lower Monday. The resolution is still likely to be down, a detour up should be relatively shallow before failing.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Thursday’s pre-open econ reports can encourage morning volatility. Friday’s report can discourage volatility Thursday afternoon. [/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.