Trading Plan for 8/10

[pay]About that close (How the prior session ended)
RSIs diverged negatively at Monday’s 1126.50 highs, producing a drop down to 1123.75. RSIs diverged positively to trigger another bounce that essentially retested the high. This resulted in a Double Top whose 61.8% retracement was still being tested at the cash session close. Closing under it would have robbed buyers of their traction. Still testing it at the close doesn’t suggest otherwise.

Pattern points (And technical influences)
The triangle at Monday morning’s lows could have been retested during the afternoon’s no-bias environment. That is, if a serious rally effort were underway. Inappropriately timed selling pressure would have trapped shorts. Instead, fresh session highs expended even more buying pressure.

That buying pressure would have gained traction if its retracement limit were recovered decisively at the close. But it was still being tested. Not fulfilling a signal at the close tends to signal the opposite. At the very least, it undermines the attempted signal from performing. Anyway, the 3:10-3:20 timing window was exited back under prior highs.

Bears have secured a negative outcome. A subsequent bounce’s only purpose is to refuel sellers. Hovering almost all of Monday above Friday’s highs reflects excessive optimism, but it also keeps alive potential for more optimism and for higher prices. Already falling back from probing higher highs would help the news to trigger a negative reaction.

Bottom line (My underlying premise)
Trending ahead of a weighty high-profile news item like Tuesday afternoon’s FOMC announcement is still possible – whether overnight, or at Tuesday’s open. But extending higher through the close is unlikely.[/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.