Trading Plan for 8/19
Did Thursday’s drop get ahead of itself?… Multiple setups have been predicting bearish behavior, and expiration could be exacerbating the setups and Europe’s news. If that explains the drop’s abnormal size, then it would mean the drop is valid, and not artificial.[pay]
Pattern points… (Setups and technicals)
If Thursday’s gap down triggered a “session-long decline”, then it fulfilled every intraday characteristic. Supports failed to hold, resistances did, and the last hour contained the session low. Here’s another interesting characteristic – the following session tends to probe lower lows.
That would seem to undermine the potential of extending higher. So would Thursday’s close.
The late 14-15 point bounce off of the 1128.25 session low already expended a lot of buying energy. And the cash session close was still testing 1140.00 instead of clearly recovering it, so the bounce’s buyers failed to gain traction.
Nevertheless, overnight action could test 1148.00 resistance just as noise. A durable bounce would not be signaled without also recovering 1150.25 through a relevant timing window.
Similarly, Thursday’s close did not react down clearly from 1140.00. So, a drop has room down to 1134.25 before signaling the decline’s resumption. And according to Wednesday’s Expiration Indicator, that’s more likely, with or without an interim bounce.
What’s Next… (Outlook and opportunities)
Thursday’s recovery back above the morning’s 1131.00 low cost sellers their traction. But buyers didn’t gain any without recovery the noon hour’s 1148.00 highs. Unless Friday’s open were to gap beyond either, then Friday’s close should be between both.
Opening within the 1131.00-1148.00 range could still attempt to trend beyond it. But the trending would likely fail and retrace if it were to originate from between 1131.00-1148.00… Thursday’s Market Wrap recording is linked here.[/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.