Trading Plan for 6/16
[pay]Pattern notes.
Monday’s last half-hour was similar to Friday’s, in one interesting respect: the misplaced optimism. Recall that Friday’s last bounce originated too late to be credible, neutralized any attraction back to prior highs, and left no intraday support below. If buyers weren’t dominating Monday’s open by gapping up above 946’00, then the open was likely gapping down under Friday’s ~931’00 low .
The overnight drop and the morning decline lost its sponsorship at the 918’00 objective, much the same way that Friday morning’s sellers lost their momentum. The balance of each session largely ranged sideways, firming into their respective closings. There was no accumulation to produce either bounce.
Friday’s bounce came from testing intraday “lower prior highs” around 937’00-938’00. Having neutralized that support, Monday’s open could easily gap down. Monday’s bounce came from testing June 3’s prior lows around 918’00. This prior low was itself a retest of a “lower prior high.” That’s hardly support, so Monday’s bounce was only obligatory, and not accumulative. Tuesday’s open can easily gap down.
An overnight bounce has room up to 925’00-926’00 without buyers gaining traction. Any higher through any relevant timing window would next probe Friday’s “higher prior lows” around 934’00. But the optimal resolution is a gap down Tuesday under Monday’s 915’50 lows that resumes Monday’s decline.
Indicators and Internals.
RSIs diverged positively repeatedly Sunday night, helping to confirm the 918’00 objective. Positive divergences into the cash session’s low found traction for the late bounce, so there is no unfinished business below. Regardless of whether Monday’s decline resumes, Monday’s lows should be retested as support if only for sellers to be trapped below.
Tuesday’s opportunities.
Sellers aren’t required to immediately retake control Tuesday. I would be suspicious of any attempt to resume the deline that wasn’t preceded by a bounce, whether overnight or at the open. But any bounce must be sizable for buyers to gain any traction, instead of likely resolving down through the morning. If sellers continue to guide intraday price action Tuesday, their influence should continue to damage the rally’s chart.[/pay]