Trading Plan for 5/23
Late breaking news? Friday morning’s bias-down left outstanding its 1327.25 target. It was fulfilled at the post-close low, erasing the 12-point mid-day rally to 1340.25. It’s either a function of expiration’s weirdness, or else the bigger underlying influences are winning out. [pay]
Pattern points… (Setups and technicals)
The morning’s bias-down signal triggered under 1335.00, targeting 1327.25, which was attacked to within 1 point at the morning’s low. RSIs diverged positively there to signal that sellers had lost momentum. No kidding, the interim bounce eventually retraced all of the post-open drop back up to 1339.00-1340.00.
But when the morning’s bias environment had lapsed, its 1335.00 bias-down signal was not recovered. So, the 1327.25 target remained outstanding, nonetheless.
Despite the afternoon recovery to the pre-open selling zone around 1340.00, the balance of the session trended down relentlessly. The cash session’s close equated to 1331.00, whose break earlier would have resumed the decline, but the noon hour’s dip stopped 1 tick short of touching it. Futures ticked down relentlessly as was expected for an expiration close. Its 1327.00 low fulfilled the target.
Fulfilling a target means that its selling pressure is fulfilled. It does not mean that sellers have lost traction. So, it does not mean that buyers have gained traction. Meanwhile, a target’s selling pressure is vulnerable to extending. Regardless, fresh lows are likely Monday since RSIs were oversold simultaneously at Friday’s low.
Unless Monday’s weak open were quickly recovered, Wednesday’s expiration signal – which suggested that the holding a test of the range’s 1340.00-1341.00 upper-end had created an attraction back down to 1316.00-1319.00 – will be fulfilled without further delay.
What’s Next… (Outlook and opportunities)
The bearish path can be avoided by gapping up above Friday’s highs, above 1340.00-1341.00. Otherwise, the open is vulnerable to gapping down sharply, perhaps even to or through 1319.00. Regardless of the path down, failing to hold 1316.00-1319.00 would put into play 1299.00. [/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.