Trading Plan for 5/23
[pay]Pattern notes.
Price action during relatively illiquid environments can be deceptive. And liquidity began evaporating soon after Thursday’s opening sequence. So it is interesting that Thursday afternoon’s last two thrusts were attempts to break under session lows – failied attempts. This doesn’t make an eventual break under Thursday’s lows unlikely, it’s just unlikely without first rallying – and then failing that.
Thursday’s range formed an Ascending Triangle. The setup has appeared several times during this week’s decline, and in each instance producing a momentary blip-up that quickly reverses down to lower lows. Eventually that fails, whether the blip-up simply forgets to blip-down, or the first break is down. We’ll still watch for the former scenario of a blip-up and still be ready for the latter.
Under normal circumstances I would absolutely expect a bearish resolution to Thursday’s narrow ranging that seemed to cheerfully ignore Wednesday’s drubbing. Liquidity is quickly evaporating as many traders try squeezing a four-day holiday weekend out of three. That might only limit the initial follow-through of a breakdown, but not inhibit its attempt.
Indicators and Internals.
MACD & RSI were mixed at Thursday’s close, but then so was price. Earlier signals had produced meaningful intraday moves. Internal spreads were hardly lopsided. So Friday’s session isn’t being entered with any unfinished business outstanding from internals or technicals.
Friday’s opening setup.
The calendar’s only econ report is Existing Home Sales at 10:00, generally a high-profile report, whose post-open timing can accelerate or reverse any initial trending underway. If there’s no trending signaled at the 10:15 timing window, then the balance of the session probably won’t trend at all. There might be an exception during the last two hours if an otherwise boring environment suddenly tries coming to life before the close – it might actually appear to rise from the dead, but then contrary forces would show it the true definition and beat prices back into through the range. Early trending would keep things lively throughout the day.[/pay]