Trading Plan for 7/21
[pay]Pattern notes.
LThe trading range character of Friday’s expiration session did persist well past Monday’s noon hour. In fact, the open’s 942’25 was still being touched as support until the last hour. That’s when the market sucked in buyers to fill the void left open by sellers. They had stopped the open’s gap up from extending higher, but never exploited it.
Except for actually breaking under a prior low, sellers did everything they could have done, and buyers absorbed it all. Almost everything. The morning’s dip down to 937’25 stopped 1 tick short of its objective, which should have been probed. Impatient buyers prevented that, but those buyers have been more productive than sellers. The afternoon’s 948’50 bias-up target was touched within 1 tick.
Buying pressure was essentially satisfied, despite the signal not having triggered. New highs are never a sell signal, and Monday’s breakout attempt would be confirmed by a second consecutive higher close Tuesday. New highs aren’t always a buy signal, either. Since the morning’s highs weren’t broken until the last hour, the breakout would be rejected by a gap down that fails to recover quickly.
Confirmation never came the last time this area was tested seven weeks ago. But the break above 926’00-928’25 isn’t likely to be recaptured near Tuesday’s open without a big tumble overnight. That would take significant weight off of buyers, but more important at this stage is whetherMonay’s new relative highs are confirmed.
Indicators and Internals.
Monday afternoon’s negative divergences into closing highs was undermined by the contrary timing, coming during position-squaring. But the afternoon lows at 940’00 were not technically sound as 3-minute RSI made lower lows despite 1-minute diverging positively. Sunday night’s last relative low had technical difficulties that made its retest likely, and its retest was essentially fulfilled. A second such piece of unfinished business below could gain traction.
Tuesday’s opportunities.
Bernanke’s House testimony will be an attraction and a distraction. Retail sales data and the 1:00 Treasury auction results may be more impactful to price action. Trending up early enough and holding up long enough would put the 940‘s behind us, possibly for some time. That might be the only path higher, since Monday morning’s dip was recovered, so another morning dip would be less likely without much stronger sponsorship.[/pay]