Trading Plan for 3/20

If the Fed wanted to trigger a downleg Wednesday… then they failed. Sure, the FOMC policy statement triggered a 25-point drop. But from one of the range to the other, easily holding a test of Monday’s mid-day low. Maybe durable follow-through is coming, but Wednesday wasn’t it.

Pattern points… (Setups and technicals)[pay]
The first drop in reaction to FOMC bottomed at 1855.00 support. Its reaction up eventually formed a Symmetrical Triangle (circled red). Breakouts in one direction tend to reverse back into and through the pattern more substantially in the opposite direction. Meanwhile, the pattern’s “key low” (circled green) is normally retested regardless of the ultimate resolution.

Wednesday’s bounce leaves one of two opens for Thursday. One choice is to gap up above the triangle and extend through Wednesday’s highs. The other choice involves oversold RSIs at the low which require a retest. That doesn’t prevent extending more substantially through the opposite end of the pattern first. It doesn’t prevent retesting the low from recovering.

By the same token, the triangle doesn’t prevent the low’s retest from simply extending — to Sunday night’s low, and through it. But if its retest were not limited only to overnight, then a significant downleg would be underway.

[/pay]What’s Next… (Outlook and opportunities)[pay]
WedEX wasn’t bullish. It won’t be, not without closing above a prior high. It could be passively bullish by holding a test of a relevant low. Wednesday’s close was still testing a relevant low at 1855.00. Wednesday’s low held a test of Tuesday’s relevant low at 1846.00, so its immediate break isn’t likely. Thursday’s open should bring more clarity to the indicator’s bias into and out of the weekend. [/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.