Trading Plan for 4/13
[pay]About that close (How the prior session ended)
Monday afternoon’s no-bias environment lapsed without yet fulfilling a reaction from 1195.75 down to 1192.25. Its target was finally touched by a drop that trended down through 3:10-3:20. The drop also touched Monday’s 1191.00 pre-open lows. A bounce into the close held 1193.50 as resistance.
Pattern points (And technical influences)
1193.50‘s significance was depicted again in the chart accompanying yesterday’s Trading Plan. The objective was met and held on a closing basis. In fact, the objective’s noise up to 1198.50 was met overnight and held.
Having met and held its objective(s), the Complex Triangle pattern’s downleg is now free to begin. A more conservative objective derived from the same Complex Triangle previously reacted down, so some sort of drop is likely. There’s another setup making a drop likely: the current Fri-Mon price action on Apr 9-12 compared to the Jan8-11 template.
The last half-hour surge Friday extended only into Sunday night in both instances. January’s drop was delayed until Tuesday’s open, after Monday’s session formed “ineffectual optimism.” In fact, the ineffectual optimism is more prevalent this week. Unlike January’s dip, Monday’s low didn’t even touch Friday’s highs.
Monday’s close was high enough to maintain potential to retest Sunday night’s 1198.50 high. But it would have to begin by gapping up above Monday’s high, because buyers didn’t gain traction. (Despite gaining ground, Monday afternoon’s fresh session high was rejected to close back under the morning’s high.) Otherwise, any early weakness would be credible for extending down into the noon hour.
Bottom line (My underlying premise)
It’s difficult to see a bearish resolution starting to form when new highs just printed several hours earlier. But Friday’s late breakout from a stand-still, and the lack of sustained follow-through, don’t suggest that a runaway rally is underway. A higher close could be bullish, but the greater vulnerability is down.[/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.