Trading Plan for 8/19
[pay]About that close (How the prior session ended)
Like the session before it, Wednesday afternoon’s probe above 1094.00-1095.00 failed to gain traction. It held as resistance through the cash session’s last 45 minutes, which ended back under the noon hour’s 1092.00 high. Futures then plunged down to 1086.00.
Pattern points (And technical influences)
Holding 1094.00-1095.00 resistance confirmed the two-day range’s upper-end remained intact. The timing is critical, because its recovery through Wednesday’s close would have signaled the rally’s resumption into expiration.
Falling back under the noon hour’s 1092.00 high through the cash session close signaled that buyers gained no traction for their efforts. Another rally attempt is possible, but it isn’t likely to gain traction without an interim probe of lower lows.Those two items would have made the past two sessions’ 1083.50-1098.50 range likely to hold through expiration. The post-close plunge breathed life into the potential for declining, instead. But it requires extending down immediately through Thursday’s open.
“Lower prior highs” at 1081.50-1085.00 from last Thursday through Monday has been tested thoroughly as support. The gap back to Monday’s 1077.50 close would be influential. Breaking under it Thursday would leave only obligatory support at 1070.25 and 1066.25 prior lows (the latter’s oversold RSIs still require its retest). Obligatory support is no match against an expiration decline.
Bottom line (My underlying premise)
Extending down at Thursday’s open is far from assured. The gap back to Wednesday’s close is 5-6 points higher. Its attraction will try to force a rally at Thursday’s open, which could marginalize sellers through the weekend. But if last Wednesday’s trend change means anything, it should mean more of a reversal than this week’s prior lows. And if this week’s prior lows are broken during expiration, then they should be broken substantially through Monday morning. [/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.