Trading Plan for 8/19
[pay]Pattern notes.
Tuesday afternoon’s price action was unremarkable, except for how unremarkable it was. The morning’s rally had targeted 988’00, which was met going into the noon hour. The pattern wasn’t required to trend again that day, and it didn’t. In fact, the close was essentially 988’00.
The rally targeting 988’00 originated during a no-bias environment. A retracement back down to the 983’50 10:15 price is required eventually. The no-bias trending wasn’t retraced during the same bias window when it appeared, so it might not retrace until Thursday. But the market remains vulnerable to retracing throughout. Rallying any further in the interim would be only temporary.
It’s too late for sellers to regain control by simply trending down from Tuesday afternoon’s extended narrow range. A false break higher would let the rubber band snap back down. Extending higher first Wednesday would find plenty of resistance into the low 990’s, “lower prior highs” from recent trending.
A gap down could relieve sellers from needing a false break higher to kick start the decline’s resumption. Gapping under 983’50 would be preferable. Simply dipping under Tuesday afternoon’s 986’00 low might only probe 983’50 as support, retracing the no-bias trending without the decline resuming.
Tuesday’s gap up and brief morning rally hardly off-set the damage done by Monday’s drop. Friday’s expiration is a wild card that may inhibit a straight path in either direction, or trending at all. But resuming the break Wednesday could find expiration exacerbating the break instead of inhibiting it. Regardless of whether the decline resumes Wednesday, its resumption remains likely – if not required – so long as 994’00-995’00 isn’t recovered on a closing basis.
Indicators and Internals.
All of Tuesday’s intraday divergences had their effect on price action, leaving no unfinished business outstanding.
Wednesday’s opportunities.
The econ calendar is almost bare. The EIA Petroluem Status report will be of special interest considering Crude’s recent volatility – its gains Tuesday afternoon didn’t do much for equities… Reminder: I will be in front of the market only sporadically throughout the day on Wednesday. The Morning Market Tour is scheduled at its normal time, and I’ll be able to jump back on intraday if price action becomes dangerous. [/pay]