Trading Plan for 7/24

If the rally wants to resume… then it will need to break the recent pattern of only probing fresh highs. At least none has been rejected back under a prior low — not yet. A new downleg won’t be so forgiving of so deep a reaction.

Pattern points… (Setups and technicals)[pay]
Tuesday afternoon’s drop returned to within 2 ticks of the mornings’ 1686.00 low. That earlier drop had already neutralized selling pressure by exiting the morning’s bias environment back above 1687.50. The cash session close was still testing 1687.50.

Buyers gained no traction Tuesday, and they left outstanding no unfinished business above to attract price higher. The rally can extend without delay Wednesday only by gapping up above Tuesday afternoon’s 1691.75 high or its 1694.25 opening high.

Meanwhile, there is room for noise under 1687.50 down to 1685.00. Reacting up from its test overnight or after Wednesday’s open might be able to launch a new rally leg. Good luck with that.

[/pay]What’s Next… (Outlook and opportunities)[pay]
The alternative to rallying Wednesday could simply range narrowly sideways, but probably not. Last Wednesday’s 1688.50 high hasn’t let trending attempts extend in either direction. But Tuesday rejected a new high, one day after the trend high close, so closing Wednesday back under a prior low like Wednesday’s 1685.00 or 1679.25 closes would trigger a very bearish Gotcha! setup.[/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.