Trading Plan for 4/22
[pay]Pattern notes.
Tuesday’s pre-open low stopped 2 ticks short of the 822’50 bias-down target. If the narrow miss were considered close enough, the intraday recovery would still be labeled a “no-bias rally.” And it would still require being retraced back down to its 826’50 origin. That’s 20 points under Tuesday’s close, and it could be 30 or 40 points from the recovery’s actual peak.
The intraday recovery stopped short of its potential to 850’25, which is now Wednesday morning’s bias-up signal. Its recovery would put into play a test of Friday’s 857’50 lows as resistance. It was Monday’s gap under these lows that made it unneccessary to fill the gap back to Friday’s ~866’50 close. The gap still wouldn’t need to be filled if Friday’s lows push back to close under 850’25.
A gap down Wednesday to 841’00-842’00 might dip another 2-3 points before recovering to resume Tuesday’s rally. Gapping down forcefully, to or through 837’00-839’00, would trigger a session-long decline. Quickly reversing down from an opening surge – essentially the inverse of Tuesday’s open – would have to reverse sharply if sellers plan to repeat Tuesday’s reversal.
Price action can still be characterized as ranging around 844’00. The bigger picture remains intact for a bigger top to be forming. But the case for that is going to fade fast, now that an attempt to drop under 844’00 has failed to follow-through. Sellers made their play Monday, and can’t delay proving Tuesday’s bounce was all about refueling sellers for a bigger move.
Indicators and Internals.
Tuesday’s intraday price action didn’t respond much to 1-minute setups, but did honor 3-minute divergences when they appeared. And they did appear, which means buying pressure went through several cycles intraday. The session’s rally was not necessarily a single move, and might prove to be nearly completed.
Wednesday’s opportunities.
It’s a relatively slow news day, although crude’s significant recent weakness has likely generated a lot of attention for the EIA report. The day should be largely defined by the opening reaction, and overnight action could leave Wednesday’s open looking much different than Tuesday’s close[/pay]