Trading Plan for 7/30

If the highs intend to be retested… then they’ll need to reject Tuesday’s decline before noon Wednesday, or at least be well on the way.

Pattern points… (Setups and technicals)[pay]
Monday night’s dive was in reaction to warnings from the EU over sanctions coming against Russia. That was recovered to probe fresh highs. Impressive. But extending higher through Tuesday’s open failed to improve RSIs. Actually announcing the sanctions drove price down sharply, more than 12 points to 1965.25.

Which isn’t very surprising, since the cash session crowd had yet to react. Surprising was the intraday drop’s recovery also failing, falling 12 points to 1963.25.

Actually, the morning’s drop had already fallen too far for a recovery attempt to succeed. Its lows required a retest — not just for being accompanied by oversold RSIs, but for having retested Friday’s 1968.00 pivotal low, which made a retest of Monday’s 1960.75 actual low only a formality.

RSIs weren’t oversold at Tuesday’s eventual low, but that was the only reason not to consider a hold-short. Otherwise, the bias environment exit and the final hour’s entry each were at or under their prior timing window’s low. Since Monday’s actual low wasn’t actually touched, the hold-short is suggesting Wednesday’s open will gap down.

[/pay]What’s Next… (Outlook and opportunities)[pay]
The paths higher to retest last week’s highs require dispensing with the downside quickly Wednesday, or else dismissing it altogether. That means either probing fresh lows early and reversing up through the opening 15 minutes, or else actually satisfying the bias-down and then recovering through the bias environment exit. Alternatively, and more succinctly, gapping up to and through 1971.50 or 1976.00 would leave Tuesday’s drop behind.[/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.