Trading Plan for 8/2
[pay]About that close (How the prior session ended)
Friday afternoon’s rally peaked upon testing 1103.50. That’s where Thursday afternoon’s test of 1099.00 had peaked, instead of the rally gaining traction. But 1103.50 held as resistance Friday, again preventing buyers from gaining traction for the effort. Sellers didn’t gain traction either.
Pattern points (And technical influences)
The 3:10-3:20 timing window extended to fresh afternoon highs, suggesting that the closing dip refueled buyers, and didn’t gain traction. Meanwhile, the day ended at or around the relevant 1099.00 level to suggest an equilibrium close. That usually produces two consecutive trending attempts, one in each direction, both failing.
Equilibrium can be overcome by gapping open beyond the range, which is defined as 1093.00-1103.50. That doesn’t preclude the open from firming to and through 1103.50 on the way to 1108.50. In fact, just recovering 1102.00 through the bias window would suffice. But that path would likely reverse back into negative territory.
1108.50 is Friday’s bias-up target, whose test became likely since the open recovered by 10:15 from testing the bias-down parameters. The entire bias timing window through 10:15 developed in negative territory, or else 1108.50‘s test would have been required.
At least two objectives remain outstanding below. Oversold resistance at the 1090.25 afternoon low, and the 1086.50 opening gap. Support at 1093.00 has been chipped away substantially, but one last probe under it in an equilibrium environment could still recover. The second test, probably not.
Bottom line (My underlying premise)
It is amazing that Friday’s open recovered from probing both bias-down parameters, since this same setup (absorbing bias-up parameters) defined Thursday’s open. If nothing else, it speaks to this week’s messiness, which I suspect reflects how big of a top is forming. Unless Monday’s open were to gap down, and likely extend, there’s probably a little more messiness ahead.
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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.