Trading Plan for 7/12

[pay]About that close (How the prior session ended)
Friday morning’s price action tracked a template that made its last 60-90 minutes vulnerable to trending sharply. The mid-day consolidation had formed a Complex Triangle (outlined in green) by not including the trend’s extreme (red X). Three attempts to extend above the breakout’s 1073.50 minimum target (circled green) each failed, finally from the triangle’s maximum 161.8% target at 1074.75.

Pattern points (And technical influences)
Several factors suggested Friday’s resolution would be down. The resolution was up, for now.

Oversold RSIs at Friday’s 1063.25 pre-open low doesn’t require a retest, but it’s likely. The morning’s 1060.50 bias-down signal became an objective of the morning’s no-bias environment. Its test was delayed to probe resistance above, resistance whose tests held through all relevant timing windows.

The last hour’s detour came from a Complex Triangle, whose target tends to produce a larger decline. Each probe above the pattern’s 1073.50 minimum target failed. Its 1074.75 maximum target was satisfied in the process.

The breakout’s sponsorship appeared literally from nowhere, after hours of unending non-committal RSIs. The 3:10-3:20 timing window signaled buyers weren’t going to gain traction for their efforts, which didn’t stop them from trying. And the market often punishes wasted efforts.

Friday’s open also filled the outstanding gap back to Jun 28’s close. It didn’t require being filled, and Friday’s close exceeded it. Slightly higher highs intraday Monday are likely, and likely to encounter a stiff challenge at 1079.00-1080.00. Any higher would start to put into play 1093.00.

Otherwise, back under 1069.00 would signal momentum reversing down, confirmed under 1065.50 and targeting 1056.50. Closing any lower would signal that the bear market rally had ended.

Bottom line (My underlying premise)
The quarterly earnings season gets underway in earnest this week. Recall that price action into and out of Memorial Day suggested results would be more surprisingly weak than strong. BP’s latest attempt to cap its well won’t be a game changer, but its results are sure to impact price action. Whatever gets it there, any probe above prior highs or below recent support is likely to attract more sellers.[/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.