Trading Plan for 5/31

Wednesday’s “session-long decline” setup… was fulfilled. All bounces were absorbed, tests of support eventually failed, and the session low printed during the last hour. In fact, the close ticked down to new lows. And the session following a session-long decline usually does something else specific, too…

Pattern points… (Setups and technicals)[pay]
Session-long declines are typically followed by probing lower lows the following day. Not simply as noise around the prior close, but actually trending down through a timing window.

At least the afternoon’s 1307.50 bias-down target remains outstanding to help attract price down. That could be met overnight, since Wednesday’s futures close already slid under the 1312.25 cash session close to 1308.00. Regardless, the delay in testing the target — more so, the detour up to 1317.00 —  makes fresh lows likely also to visit 1301.00. Almost any bullish scenario would require gapping up above 1318.00.

Reacting down to 1308.00 suggests the corrective bounce off of 1290.00 was influenced by its 1332.00 bounce limit. The bounce has likely ended. But at least a lower close Thursday is needed to confirm momentum has reversed down. Look out above if fresh lows are reversed into positive territory coming out of the noon hour.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Accelerated breakouts among currencies Wednesday still need confirmation from a second consecutive higher close Thursday. And being Thursday, that would be terribly vulnerable to extending sharply and substantially into and out of the weekend. Memories of October 1987 come to mind (James Baker on the Dollar: “…let it go”). If Thursday doesn’t confirm Wednesday’s break, then all asset classes would become vulnerable to reversing their recent trending. [/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.