Trading Plan for 3/24
[pay]About that close (How the prior session ended)
The afternoon had avoided any repeat of the morning’s sell-off attempt. The no-bias environment started lapsing after 2:30 with price at session highs, at the afternoon’s 1164.25 bias-up signal. The potential to probe fresh highs couldn’t be discounted, let alone the potential for fresh highs to gain traction.
This vulnerability was made clear by a sudden spike up after the last hour started. The 3:10-3:20 window trended up to higher highs, essentially marginalizing sellers for the day. The breakout extended until touching the afternoon’s 1170.50 bias-up target, where 1-min RSI diverged negatively.
Everything about the breakout says excessive optimism. Its timing was too late to be the product of accumulation. Its steep slope was appropriate for a short-squeeze. Its relentless follow-through ignored an opportunity for dip to refuel. Even after the cash session close, price only ranged narrowly at the breakout’s highs.
Pattern points (And technical influences)
The morning’s dips weren’t accumulation. If they were, the the eventual breakout would have occurred before the session’s last hour. Whether after the noon hour or when the afternoon’s bias environment was lapsing. New highs in the last hour aren’t the problem – waiting until the last hour is.
The morning’s dips reacted with probes above prior highs. Any one of those could have gained traction, but didn’t. Instead, each test held through a relevant timing window.
Fresh breakouts are at their most vulnerable to being proved false. Gapping down Wednesday to the 1164.00-1165.00 “lower prior highs” would still be likely to retest Tuesday’s 1169.50 close, up to 1172.25. Gapping down under Tuesday afternoon’s 1162.25 low or extending under it would trigger a session-long decline.
Bottom line (My underlying premise)
False breakout or not, excessive optimism can become more excessive. Actually, this is much easier than turning a pessimistic condition optimistic. Extending Tuesday’s breakout higher (and not just briefly probing higher highs) would next target 1179.25-1181.25. Regardless, avoiding a drop back under Tuesday morning’s highs would mean that sellers, as with Tuesday morning’s dips, simply aren’t ready to retake control.[/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.