Trading Plan for 3/23
[pay]About that close (How the prior session ended)
Monday’s close ranged sideways above the noon hour’s 1160.50 high, and under the afternoon’s 1163.25 high. The afternoon was already likely to range sideways, albeit widely – both up and down, and not just up.
The morning’s no-bias environment had held a test of the 1151.00 bias-down signal, creating the objective to test the 1161.50 bias-up signal. The afternoon’s no-bias signal was fulfilled by ranging sideways. In the process, the morning signal’s objective was satisfied. No unfinished business was left outstanding.
Pattern points (And technical influences)
Monday’s post-expiration session was on-track to duplicate the expiration session’s pattern, whose trending in the morning was followed by afternoon ranging. Friday morning’s trending was down, Monday’s was up. Friday afternoon’s range widened around the noon hour’s range.
But Monday afternoon’s ranging only probed above the noon hour highs. The range didn’t probe under Monday’s 1157.50 low. This is unfulfilled pent-up selling pressure. It could have been neutralized, had buyers gained traction into the close.
Buyers didn’t gain traction because the afternoon’s no-bias high was tested as resistance when the bias environment had lapsed. And the test held. Having made the effort to extend higher, it became relevant whether the rally did actually extend higher. And whether it did not.
There is always the potential for a delayed reaction. That’s what bias signals are for. It’s essentially the same trigger that would have confirmed trending Monday afternoon. But it’s too late to neutralize Monday’s pent-up selling pressure – if it doesn’t influence Tuesday’s immediate open, then it’s likely to undermine an attempt to extend higher.
Bottom line (My underlying premise)
There’s no requirement to test last week’s highs, but they’ll probably be retested anyway if Tuesday’s open isn’t in decline or already rejecting initial strength. The economic calendar starts to come alive Tuesday, and its timing is interesting. Against its backdrop, Monday’s relief rally will be trying to prove whether it is just that, or more. [/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.