Trading Plan for 6/12
If there were no incident in Atlanta at Tuesday’s open… then would the intraday bounce have been so substantial? Would there even have been a rally but for those knee-jerk reaction trapped shorts getting squeezed? They might only have delayed a deeper drop.
Pattern points… (Setups and technicals)[pay]
Monday night’s slide had neutralized a lot of bearish influences. The delayed resolution under Monday’s 1638.00 low was likely to compensate for the delay by being aggressive. Check. The next downleg was likely to extend down to Friday’s 1625.75 low before hesitating. Check.
All of which was already considered bullish enough Tuesday morning for a morning bounce. Then an explosion in Atlanta triggered lower lows that filled the gap back to Thursday’s 1621.00 cash session close. Another bearish influence neutralized. Check.
A recovery attempt was not required, but it wasn’t going to be difficult. In fact, the highest objective at 1638.00 was probed by 2 points before noon.
And that’s where the clock was reset.
Remember those bearish elements that were neutralized at Tuesday’s open? Now the bullish elements had been neutralized. Monday’s high was retraced by 61.8%. The bounce’s peak held a test of Tuesday’s 1639.00 “higher prior low.” Friday afternoon’s 1631.75 low didn’t hold as support. The afternoon bias-down signal triggered. Its target was still being tested at the close.
Only overbought RSIs left outstanding at Tuesday’s high are undermining the decline. And that won’t be relevant if the decline resumes Wednesday.
[/pay]What’s Next… (Outlook and opportunities)[pay]
Weak-handed buyers prevented Monday’s rally from extending. And they didn’t prevent the Tuesday’s drop from resuming. The question is whether selling pressure was fulfilled by closing at the afternoon’s 1627.25 bias-down target. Oversold RSIs at Tuesday’s 1624.50 low requiring a retest — neutralizing them without extending any lower could form a near-term bottom. [/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.