Trading Plan for 7/30

[pay]About that close (How the prior session ended)
Thursday’s last hour ended an afternoon rally that had retraced nearly all of the morning’s losses. The close was between 1093.00 and 1099.00, prior lows and prior highs, respectively. Sellers were robbed of their traction, while buyers were prevented from regaining it. But damage was done, failing another test of prior highs while chipping away at support.

Pattern points (And technical influences)
The consolidation at Thursday’s lows formed a Symmetrical Triangle. Its highest calculable target – a 261.8% extension – defined the afternoon’s 1103.50 high. RSIs diverged on its retest, triggering the reversal into the close.

Symmetrical Triangle’s tend initially to break falsely in one direction, before reversing back into the pattern. Often the false break is in the wrong direction, and occasionally the break is only premature. But the breakout is typically retraced, and Thursday’s late drop extended overnight to the afternoon upleg’s 1090.00 origin.

The opportunity was missed to close under 1093.00 and to maintain sellers’ traction. Now sellers can regain traction by closing under the 1088.75 low of 1093.00‘s test. This being a Friday, any sell-off underway that targets a break under 1088.75 would be credible for resuming the decline. By the same token, closing above 1093.00‘s test would give buyers traction.

Bottom line (My underlying premise)
Having chipped away at the natural support of “lower prior highs,” a break maintained under 1093.00 would be much likelier to extend down. Trying to extend down, but failing, would therefore be bullish for next week. Sellers may be better served by not trying to retake control Friday, so any attempt had better succeed to avoid trapping shorts.[/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.