Trading Plan for 7/2
[pay]Pattern notes.
Wednesday’s session didn’t need to test Monday’s 924’00 highs as resistance. Simply attacking it intraday without actually touching it would have reflected pessimism. This pessimism would have been bullish from a contrarian perspective, pre-discounting a negative reaction to Thursday morning’s econ reports. It wouldn’t have marginalized sellers, but that’s not the same as a sell signal.
Instead 924’00 was probed pretty thoroughly, by at least 4 points. Then it was tested as support, and finally buyers tempered their enthusiasm. Bad timing. Rather than resolve up, the return to 924’00 ranged narrowly through the noon hour and beyond. A mid-afternoon dip under 924’00 only slid lower into the close, eventually piercing 918’00.
Dipping into Thursday morning’s econ reports was less contrarian than the open’s hesitation could have been. Perhaps a late-afternoon or last-minute dive would have been pessimistic, but dropping for seven straight hours reflected more about sellers than about buyers. A favorable reaction Friday morning is still possible, just much less likely.
Indicators and Internals.
Technicals never really extended Wednesday, making it difficult to counter. This remained true through the close, so there is no unfinished business to resolve in either direction.
Thursday’s opportunities.
Closing decisively under Monday afternoon’s 920’00 lows would have given sellers traction. It was still in the process of being tested as support, so a reaction up remains possible. Recovering 924’00 through a relevant timing window would once again prevent sellers from regaining traction – and, once again, that won’t necessarily default to rallying. Meanwhile, the gap back to Tuesday’s 916’25 close is near enough to be influential. Any lower could slide down a slippery slope to and through Tuesday’s 908’25 lows.
The three-day holiday weekend already skews normal timing windows. The econ reports’ data dump could wreak havoc. It wouldn’t be surprising if the session only ranged sideways – widely, but sideways. Trending early enough could make significant progress before things slowed ahead of the afternoon slowdown. [/pay]