Trading Plan for 3/10
[pay]About that close (How the prior session ended)
Tuesday morning’s recovery to new relative highs tracked an intraday pattern that included one more trending leg. Typically that leg is in the direction of the morning’s trend. And when that leg is delayed by a narrow range, its rally tends to be substantial.
The session’s last trending leg was delayed by a narrow after bias environment, and so it trended sharply. But it didn’t resume the morning’s rally.
The drop was still a product of the price action preceding it. So it is relevant that the 1139.75 close was still in the process of testing Monday’s highs as resistance. Buyers didn’t gain any traction. The substantial morning-long rally and the probe of prior highs expended a lot of buying pressure. But the ranging that began at Friday’s high is still forming.
Pattern points (And technical influences)
Although Tuesday afternoon’s bias-up environment didn’t hit its target, it did touch the 1145.25 bias-up target of the past several bias timing signals. And the bias-up environment ended within a tick or two of session highs. There is no unfinished business above.
The afternoon’s drop did retrace 61.8% of the morning’s rally, so there is potential for bouncing overnight, but no requirement.
The drop bottomed 1 tick short of 1136.00, whose break would have merited holding short through the close. Optimism prevented touching it despite coming so close and so forcefully. Despite the potential to bounce overnight, it would be likely to fail. In fact, oversold RSIs at the drop’s low 1136.25 require its retest.
Since Tuesday’s session closed with a bounce, and the afternoon’s 1136.25 low printed prior to the last half-hour, a gap down under 1136.25 would trigger the session-long decline setup. Like Tuesday’s open, a gap up is needed to extend the rally.
Bottom line (My underlying premise)
Tuesday afternoon’s highs consolidated around 1143.00, which is essentially the “higher prior low.” Its retest overnight would be likely to push price back down. Its recovery would give a rally another chance at gaining traction. Like Tuesday, most other scenarios simply point down… The front-month rolls to Jun at Thursday’s open. Its pricing is 4-1/2 points under Mar.[/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.