Trading Plan for 4/2

If Monday’s opening high was a precursor ro higher highs… then it should be recovered by Tuesday’s close. Other than to retest Monday’s lows and trap more shorts there, further delaying the rally’s resumption would be bearish.

Pattern points… (Setups and technicals)[pay]
Reacting down Monday from 1565.00 is one reason why the reaction down is relevant. Testing 1555.50 also makes it relevant. The test — both tests — are ongoing, and unresolved.

The test of 1565.00 above hasn’t been resolved, since the same session that contains a new trend extreme cannot also contain that trend’s reversal signal. Since Monday’s 1565.00 high is a new trend extreme, Monday’s session could not signal the trend reversing down.

1555.50‘s test hasn’t yet resolved either, since it was still being tested Monday at 3:57. Its recovery or rejection was needed no later than 3 minutes prior to the cash session close. It was finally probed higher, up to 1556.75, which was too late to represent 1555.50‘s recovery.

Ironically, the reaction down from 1565.00 is what keeps alive potential for resuming the rally. Despite reacting down so significantly from so significant a target, sellers were a little impatient for reacting down so quickly and bouncing so shallowly (about 38.2%). They also failed to extend the afternoon’s break under the morning’s low. But until proved otherwise, a bounce is likely to fail and resolve down.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Regardless of the ultimate resolution, Monday’s 1552.50 low should be probed. Probing it early Tuesday and recovering back into positive territory would suggest that sellers had been absorbed. Otherwise, the decline is assumed to have resumed if Monday’s 1553.25 low fails to hold through a relevant timing window.[/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.