Trading Plan for 3/10

[pay]Pattern notes.
Friday’s last-minute surge wasn’t retraced entirely at Monday’s cash session low. The overnight low had been deeper, but still stopped optimistically short of probing Friday’s low. Not that there’s anything wrong with optimism. But it’s wasted on preventing a required retest, and sorely missed when trying to extend a bounce.

Monday afternoon’s low probed, retested, and essentially closed under 674’75. This bearishness was in-line with printing new session lows into the last hour, and with sellers controlling the 3:20-3:30 window. The decline could have extended down from there without leaving any unfinished business above. The decline’s resumption is nevertheless likely so long as price is orbiting around Monday’s low.

That orbit is being challenged by an overnight bounce that has gained 10 points to 686’00. The follow-through from Monday’s close might have been limited only to retesting Friday’s low, not by a little, but probably not much more. Extending the decline now would find sellers refueled, to the extent that overnight action can refuel intraday sponsorship. The trade-off would be a deeper extended decline.

But rallying any higher than 686’00 would start to break free from the magnetic attraction of Monday’s low. A strong enough gap up is the only way to do escape the consequence of having broken under 674’75 Monday. Sellers would be shut out once again, as a session-long rally was signaled. Otherwise, the overnight refueling would likely trigger a session-long decline.

Indicators and Internals.
Technicals began diverging negatively after midnight, causing an extending sideways range. Technicals were mixed on a break higher and the break higher was almost immediately retraced. The 3-minute RSI was at its lowest oversold at the overnight price low, a setup that would require a retest had it formed intraday.

Tuesday’s opportunities.
Back under 680’00-681’50 would signal the overnight bounce’s momentum was reversing down. Sellers first challenge would be to break under 677’25 again. The next test of 674’75 need not offer the slightest obligatory support anymore before extending down. Gapping up above 686’00 would be a good step towards reversing the trend up, and aI wouldn’t count on much hesitation at rallying throughout the day. But the bearish resolution continues to be more likely.[/pay]