Trading Plan for 3/29

[pay]About that close (How the prior session ended)
The only thing remarkable about Friday’s last hour is how unremarkable it was. Price action was essentially stuck within a relatively narrow 2-point range. The 3:10-3:20 timing window didn’t trend. Not until the position-squaring window ended was there any semblance of trending – adding all of 2 points into and out of the cash session close.

Nevertheless, this did form the basis for a setup, the session-long decline. The setup’s basis is trending up into the close, further from an afternoon low that printed before the last 30-60 minutes. The setup is irrelevant if not triggered by Monday’s open gapping down through Friday afternoon’s 1156.50 low.

Pattern points (And technical influences)
Gapping down to Friday afternoon’s 1156.50 low or testing it will be much easier than actually breaking through it. It happened to form upon fulfilling the afternoon’s 1156.75 bias-down target. Selling pressure was satisfied. The closing bounce managed to touch the afternoon’s 1163.75 bias-down signal, but it wasn’t recovered.

Perhaps selling pressure was fulfilled at the afternoon’s 1156.75 bias-down target, but its oversold condition was neutralized. The low’s retest is likely, since its RSIs were simultaneously oversold. Quickly testing and holding Friday’s low would suggest that sellers were done. RSIs diverging positively would suggest that accumulation was forming a bottom.

A bottom would be surprising. At least one of Thursday’s sell signals was fairly substantial, in its structure, timing, location, and degree. There was nothing bullish about it, and one day of follow-through hardly seems adequate to satisfy its distribution. Especially since the follow-through was interrupted by another opening bounce.

Friday’s close was still in the process of testing Thursday’s close as resistance, ignoring plenty of time to recover it. Meanwhile, the afternoon’s bounce peaked upon retracing 61.8% of the noon hour drop.

Bottom line (My underlying premise)
Friday’s last 90 minutes looks more like patient sellers, than like ineffectual pessimism. But if pent-up buying pressure produces a third consecutive gap up anyway, then it is likely to be rejected for a third consecutive time. Recovering Friday’s 1169.00-1170.00 high would negate the sell signals already in place. Holding a retest of Friday’s 1156.50 low would suggest the sell signals have ended. Otherwise, the sell signals in-play have met one target, corrected it, and are now ready to put the next lower target into play. [/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.