Trading Plan for 6/30
[pay]Pattern notes.
Monday’s Trading Plan didn’t have much to add since Friday. Just turn Monday’s upside-down to get a feel for Tuesday. Friday’s “ineffectual pessimism” made likely a probe of higher highs. Since Monday’s probe of higher highs quickly peaked, its complete retracement is now all but required – whether or not preceded by yet higher highs.
First, the likelihood for a complete retracement… Thursday and Friday’s “lower prior highs” at 918’00 lie just 3 points under Monday’s 921’00 close, and should be tested as support regardless of the eventual resolution. The test could bottom upon testing the level of Friday’s 913’50-914’00 close. But Monday morning’s 911’50 low also requires an eventual retest (see Indicators and Internals section below).
The shallower dip to 913’50-914’00 would not be deemed complete until recovering above 923’00. A deeper dip back to Monday’s lows at this stage of the pattern would be unlikely to recover at all, especially if initiated by gapping down under 918’00.
As for extending higher before reversing down… Monday’s narrow six-hour ranging indicates thin buying. But not dipping intraday just a couple of points suggests the pattern isn’t ready to reverse down. The base is too narrow to launch a durable upleg, but a failed higher high won’t be signaled until breaking back under 921’00. Quarter-end influences could squeeze higher highs higher still in bubble-like fashion.
Indicators and Internals.
Monday morning’s 911’50 low requires an eventual retest because both 1-minute and 3-minute RSIs were oversold during its formation. The most oversold 3-minute RSI also accompanied the actual low price bar. The buyers attracted to this setup are not durable, regardless of their productivity. The rally’s steep slope, its sudden stop, and the extended range all confirm the sponsorship ran dry.
Tuesday’s opportunities.
A lot of econ reports are coming. Surprises to either side are possible. More important is whether the current highs have discounted too much of either, or not enough. The mood revealed Tuesday morning might be more revealing than what price limit is exceeded or held. Monday’s opening had a chance to reveal market direction, too, but only ranged narrowly through the day. This price action isn’t likely to repeat immediately. [/pay]