Trading Plan for 7/6

Protugal’s non-news news produced a reaction… but nothing lasting. Neither the specific event itself, nor its specific timing were known. But the narrative is an old story. So, the 6-1/2 point plunge it produced was recovered entirely. Same day.[pay]

Pattern points… (Setups and technicals)
That’s not meant to undermine the narrative’s significance. The narrative is well disseminated. Tuesday afternoon’s plunge was justified for the news’ unpredictable timing, and for it inhibiting buyers. But I doubt the downgrade attracted a single new strong-handed seller.

That was already enough for an overnight rally attempt to extend higher, or to absorb an overnight decline. Closing back above 1332.50 confirmed, because closing any lower would have triggered a “hold-short through the close” setup. Sellers tried repeatedly intraday to trigger a downleg, failing every attempt, right down to the close.

So, avoiding a bearish setup was essentially bullish, since the burden of proof was on sellers, and they didn’t convince.

Anyway, the market already figured that out. The 1333.25 cash session close was recovered up to 1337.00 into the futures close. The 1339.00-1340.00 objective put into play above 1307.00-1308.00 is still close enough for noise to touch. Failing to close above it after being tested would suggest the rally had lost its momentum.

What’s Next… (Outlook and opportunities)
Meanwhile, a test of Tuesday morning’s 1327.75 bias-down signal is unfinished business below. Delaying its test until after touching 1339.00-1340.00 would help to attract price back down. Testing 1327.75 first would help to refuel sellers buyers for a better chance at breaking above 1339.00-1340.00.[/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.