Trading Plan for 7/11
Now, that’s a target… Unfinished business at 1354.50 was left outstanding after Thursday’s breakout. Fresh highs touched it Friday morning, neutralizing its attraction. The Employment Situation report exploited the sudden defenselessness, putting the rally’s momentum on defense. Friday’s close met a similar target at 1341.75.
Don’t forget about Saturday’s Strategy Session at 9:30am ET. Its link is in the sidebar. [pay]
Pattern points… (Setups and technicals)
Will 1354.50 be revisited? Probably. Either very early this week, or else very far into the future. In other words: sooner, or else much much later.
1354.50 was part of a consolidation that included the prior day’s high, so it is not a “new Globex trend extreme” that would otherwise require a retest. But it should be tested while filling the gaps back to Thursday’s 1349.50 cash session close, and to its 1351.75 futures close.
And the the gaps back to Thursday’s close(s) are likely to be filled until a prior low is broken. Wednesday morning’s 1326.50 low is the prior low, and Friday’s substantial drop stopped 3 points short of even touching it. Unless it were broken Monday, the attraction back to Thursday’s close is stronger than the decline’s momentum.
Of course, avoiding a test of 1326.50 while coming so close reflects excessive optimism. Closing the cash session above 1339.00-1340.00 would have been bullish, instead of at it (the first time this objective has been tested intraday). Neither is a sell signal, but each provides unfavorable context for trying to recover.
What’s Next… (Outlook and opportunities)
Friday’s close above 1336.00 came the by grace of a late rally. The excess above it is as fresh and vulnerable to failure as was Thursday’s breakout. Friday’s futures close peaked upon testing the afternoon’s 1341.75 bias-up target, similar to the pre-open test of Thursday afternoon’s 1354.50 bias-up target.
Gapping down or quickly sliding under 1336.00 would reject Friday’s late break above it. Ending the opening 15 minutes of volatility under 1333.00 would signal a session-long decline. Avoiding either of these setups would be likelier to fill the gap back to Thursday’s 1349.50/1351.75 closes.[/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.