Trading Plan for 8/20

[pay]About that close (How the prior session ended)
The balance of the afternoon was most likely just to range sideways. An aggressive-looking surge to fresh afternoon highs tested 1077.50. RSIs deteriorated on its retest to leave no unfinished business above. The deterioration also created a dive to 1070.50 into the futures close.

Pattern points (And technical influences)
Closing under the two prior sessions’ 1083.50-1084.00 lower-end kept alive the potential for trending down during expiration Friday. That potential is a function of Wednesday’s post-close plunge having extended when Thursday morning’s opening 15 minutes of volatility had lapsed.

Sellers hopes have been pinned to late signals earlier in the week, too – most notably at the rejected Tuesday and Wednesday afternoon bias-up signals. Now sellers hopes my depend upon rejecting another signal.

Thursday’s 3:10-3:20 window began by probing fresh afternoon highs, and it ended without rejecting the probe. This means the next dip’s purpose would be to refuel buyers. The next dip already came, into Thursday’s close. And its post-close portion of the dip was too deep for recovery.

Friday’s open can reject the post-close portion of the dip by gapping up above 1074.00 and extending to fresh highs around 1079.00-1080.00. That would be difficult to reverse in time to signal a bias-down. Rallying and failing overnight would let expiration’s sellers retake control at the open. That, or simply ignore the bullish 3:10-3:20 signal.

Bottom line (My underlying premise)
However they do it, sellers retaking control Friday could point sharply lower. Last Monday’s oversold RSIs at 1066.25 would offer only obligatory support along the way to the 1053.00 area or lower. Buyers retaking control at the open would have potential up to the 1084.00 area before another downleg could form.[/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.