Trading Plan for 6/2

[pay]Pattern notes.
Monday’s opening surge started from above Friday’s high. A breakout needed only to close above Friday’s high, so the expedited schedule reflected impatience. This impatience tainted every subsequent probe of higher highs. In fact, the session’s very last move was a dip back down to post-open lows at 939’50 (highlighted pink on the nearby chart).

Price has since dipped another 2 points into the evening, but that won’t be relevant unless it leads to gapping down under a prior high or prior low. Much more relevant otherwise is that a prior low held on a closing basis. That maintains the potential up to 950’50 (+/- 1 point), put into play by Monday’s breakout.

The 950’50 target area is the product of a multi-week Descending Triangle that broke higher Friday, but stopped short of signaling a breakout. The late surge’s high probed all prior highs and also closed back under them. Monday’s alleged breakout might yet prove valid if confirmed Tuesday, by closing above Monday’s 947’25 high. Stopping short wouldn’t mean momentum was reversing down, not yet. But intraday probes of higher highs would be expected to fail.

The resolution is normally brief after breaking  upward from a Descending Triangle. It is not a continuation pattern. “The bigger they are, the harder they fall,” doesn’t always apply in charting – but it does apply here. So long as pullbacks hold prior lows, Monday’s high will be probed.

Indicators and Internals.
3-minute RSI was at its highest overbought when Monday afternoon’s high printed. Its retest is likely, especially so long as pullbacks hold prior lows. The retest might be brief, since technicals on other time frames already started deteriorating before Monday’s high.

Tuesday’s opportunities.
The overnight dip has room down to 935’00-936’00 before breaking free from the orbit around Monday’s highs. But there is still substantial support at Monday’s 930’00-932’00 open. This area can bend, but would be difficult to break intraday, after the open and before the close. The rally can tolerate intraday weakness, but not a close under support. And until then, there remains potential to retest of Monday’s 947’25 high up to the 950’50 area.[/pay]