Trading Plan for 6/3
If Friday morning’s sellers had no opposition like the afternoon’s sellers… then would the session have ended even lower? Maybe not. Testing support and neutralizing an attraction below early enough on a Friday can suddenly find sellers expended and buyers excited. Instead, the weekend was greeted the other way around. And by the way, that’s how the quarter’s second month ended.
Pattern points… (Setups and technicals)[pay]
So long as Friday afternoon remained vulnerable to sellers retaking control, then it remained vulnerable to getting very, very ugly, ugly. And sellers were able to retake control, since buyers expended so much energy for so long without gaining any traction for the effort.
Sellers would have retaken control by exiting Friday’s open under 1645.25, which the open attacked to within a tick before 9:45. Its break coming out of the afternoon’s bias timing window at 2:30 confirmed a sell signal that had triggered under 1651.00. It had the same effect as if triggered during the open, and even compensated for the delay. Its minimum objective was to probe fresh lows for the week under 1638.00, but the drop didn’t stop until probing 1 point under the prior week’s objective at 1627.25.
That’s a lot of selling pressure to expend. It’s also a lot of selling pressure to fulfill. But was it too much selling pressure to fulfill for a hold-short setup to be compelling?
The break under prior lows was not well underway until exiting the bias environment. And it didn’t begin so late as to be sponsored by weak sellers getting trapped. Extending all the way to the lowest objective could have been bullish if there were also a reaction up above a resistance. Any resistance. But closing AT a relevant level is equally vulnerable to Monday’s open either extending down sharply, or reacting up sharply.
[/pay]What’s Next… (Outlook and opportunities)[pay]
The next lower objective is 1612.00-1615.00, and then essentially 1590.00. A bounce or gap up Monday could test 1640.00 or 1643.00. These might seem like a 1:1 risk-to-reward ratio, but the downward momentum and likelihood of a bounce resolving down were very compelling to consider a hold-short through the weekend. [/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.