Trading Plan for 3/23

Worse than trending in the wrong direction… is not trending at all. Tuesday morning’s action essentially fell into this trap. There was movement, but mostly in a relatively narrow range. Flat RSIs accompanied the most productive price moves, which means they lacked sponsorship that could extend the move. Probes of fresh lows all recovered before their timing could gain traction.  [pay]

Pattern points… (Setups and technicals)
The most bearish case to make is that none of the failed probes of support trapped shorts into a squeeze higher. The last bounce stopped 1 tick short of touching the 1291.00 buy signal. And its reaction closed back at intraday support around 1289.00.

Tuesday’s price action was a series of lower highs and lower lows, which resembles trending. But each intraday leg overlapped part of all others. The most bullish case to make is that the 1289.00 bias-down signal held as support through the close, despite support having been chipped away throughout the day.

Buyers didn’t gain traction, and neither did sellers.

3-minute RSIs barely acknowledged overbought and oversold territory, stuck mostly in mid-range throughout the day. Buyers and sellers didn’t gain traction because buyers and sellers expended now pressure either way.

What’s Next… (Outlook and opportunities)
Closing at or around session lows requires any credible rally attempt to begin suddenly, and to be steep. Back above 1291.00 and 1293.50 would target 1297.00 and 1300.00. But 1291.00‘s recovery must be aggressive. A weaker rally effort would almost be a sell signal, as would exiting the open at new lows for the week under 1288.00. [/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.