Trading Plan for 3/8

Hurry up, and bounce… Friday and Monday each fell sharply through their mornings. Their afternoons ranged flat to higher. But two consecutive similar patterns tend to resolve differently. So, Monday’s open should either be down, or else extend a gap up. [pay]

Pattern points… (Setups and technicals)
Monday and Friday afternoons formed similar patterns. Friday ranged narrowly at support, while Monday afternoon trended up. But the data points identified in the nearby chart show similar counts and structures.

Friday’s instance resolved in a short-squeeze. Successively higher highs repeatedly returned to support, creating “ineffectual pessimism.” Its pent-up buying pressure was unleashed into the close.

Monday’s successively higher highs also returned to support. But it was a rising support. This optimism gradually released buying pressure, instead of forcing it to become pent-up.

Impatient buyers did not hijack Monday’s pattern. But a signal for holding short through the close did not trigger. Narrowly holding above 1309.00 left the door open to an overnight bounce.

What’s Next… (Outlook and opportunities)
Gapping up through 1314.00 may be the only credible path for avoiding lower lows Tuesday. And lower lows through Tuesday’s open would resume the decline, targeting 1298.50 on the way to 1271.00. [/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.