Trading Plan for 8/2

Anxiousness into FOMC erased… overnight gains. Anxiousness after FOMC probed overnight lows. That combination isn’t typically reversed back up immediately. But it had better reverse up soon to avoid trending much lower first.

Pattern points… (Setups and technicals)[pay]
Tuesday night’s rally suffered the same fate as Sunday night’s rally, peaking into the following session’s open. Monday’s peak came after the open, while Wednesday’s peak came just before. It’s the same result: retracing all of the overnight rally.

Wednesday’s retracement pushed a little deeper, and was likely to trend down further overnight. Closing under 1372.25 and 1371.00 made the intraday 1367.75 low likely to be probed, down to 1366.00-1367.00 or to 1360.00-1361.00.

Attraction under Wednesday’s low — likelihoods of gapping down Thursday — must hold 1375.00 as resistance. Opening Thursday back above 1378.00 would rob the decline of its traction, and above 1381.00 would reverse momentum up.

Friday’s late surge from 1372.25 may have skewed the downleg that could have begun then and there, delaying its timing. Or, the late surge may have skewered the downleg, by creating room to absorb selling pressure before extending the rally.

[/pay]What’s Next… (Outlook and opportunities)[pay]
This week’s highs don’t require a retest, but the trend has not yet reversed down. If Thursday’s open does not settle the “skewed or skewered” debate, then Thursday’s close should.[/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.