Trading Plan for 8/10
So, is it safe, yet?… The drop from Tuesday’s 1149.00 high fell to 1097.00. It produced the first intraday test of the decline’s 1100.00 objective, which had been put into play Monday under 1145.00. Its reaction up touched 1170.00 at the cash session close, and 1175.50 after it, nearly 100 points above Monday night’s 1077.00 low. [pay]
Pattern points… (Setups and technicals)
Assuming that Monday’s intraday plunge (with or without overnight) fulfilled the crash template, a corrective bounce would now be underway. Not an extended rally, possibly not lasting beyond Thursday morning, before making another run at the lows.
A runaway rally is not likely. Monday night’s 1077.00 low is a “new Globex trend extreme” that requires being retested intraday. It might not be tested for weeks. Until then, any interim rally is only a correction. The unfinished business below may inhibit a rally but not prevent it; it only requires a rally to eventually retrace back to its origin.
By the way, I’m assuming the (up)crash(down) template has run its course. Since the template doesn’t occur often, it may play out differently eventually. And since the template only produced one of its two allowable counter-trend bounces, I have to wonder whether Tuesday’s rally was its second.
Tuesday’s rally didn’t close above Monday’s high, so its buyers didn’t gain traction. The rally was isolated to the session’s last hour, and already expended 80 points of buying pressure. Nevertheless, another down-crash is unlikely – not nearly as likely as was Monday’s – but possible.
What’s Next… (Outlook and opportunities)
Tuesday’s bounce quickly extended to almost 1178.75. But 1178.00 must be recovered through a relevant timing window to avoid a dip, its potential being 1145.00 or 1132.00 – any lower could revive the crash template. Extending the corrective bounce would target 1203.00, 1218.50 or 1243.00. [/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.