Trading Plan for 7/30

[pay]Pattern notes.
There is recent history to the Esu 1260’00-1263’00 area, which was tested through Tuesday’s last 20 minutes. This was the target of the corrective bounce from July 15’s 1200’75 low. The last time this area held a bounce was Friday’s opening 10-point surge, following a two-day detour that had reached 1291’25 Wednesday.

Tuesday’s rally recovered half the distance from Monday’s close back to Wednesday’s high. The 50% retracement is one of the three most often accompanying a retracement’s end. This would be one of those times with a close under only 1257’00 Wednesday, regardless of any intraday gain.

A close above 1263’00 would be a good first step to proving Tuesday’s rally was much more than a correction from Wednesday’s high. It would remain to be seen whether that yields much more than a brief probe of Wednesday’s high up to 1303’00.

Indicators and Internals.
Despite Monday’s steep decline, its internals had obligated Tuesday’s market to reward buyers for their relative productivity. Tuesday’s internals were the inverse, making at least a temporary dip likely Wednesday. The 3-minute RSI was overbought at Tuesday’s high before the session’s last-minute dip, but the Globex open quickly retested Tuesday’s high to neutralize its magnetic attraction. RSI was oversold at the overnight low – 1231’50 – whose retest is no less required.

Wednesday’s opening setup.
Econ reports are scarcer than quarterly earnings. An opening gap or spike under 1257’00 would target 1249’00. Another couple of ticks lower from there would target a retest of Tuesday’s opening range. An opening dip that doesn’t break under 1257’00 would likely recover and probably probe Tuesday’s highs. I will provide parameters for opening strength if that is indicated.[/pay]