Trading Plan for 8/24
[pay]About that close (How the prior session ended)
The afternoon’s false break higher didn’t reverse down immediately. But it did reverse down eventually. And it made up for lost time. An outstanding test of the morning’s 1065.00 bias-down signal was fulfilled at the cash session’s last-minute low. It was probed by 3 ticks but recovered at the futures close.
Pattern points (And technical influences)
If Monday’s open fall to 1065.00, then an opening test of the 1075.00 area was likely first. The open probed 1075.00 by 5 points, but buyers still gained no traction as the morning’s no-bias signal was triggered. And the balance of the morning reversed into negative territory.
Then the mid-day pattern tracked another template needing to blip-up before reversing down more substantially. That started out appropriately, too, but also took a little extra time to fulfill its most bearish element.
Seeing the pattern? Sellers twice waited to trend down, making their sponsorship suspicious. While the delays did allow more longs to be trapped, the eventual drops already fulfilled that selling pressure. Trending down Tuesday to 1053.50 will need to extend down without delay, or without very much delay at all.
Otherwise, the likelier scenario would be a morning bounce up to the 1071.00 area to refuel sellers again. And having closed AT the 1065.00 target, “equilibrium” might be in-play. At least two failed trending attempts – trending, not noise – are possible Tuesday morning before trending can gain traction.
One other possible setup is the “session-long rally.” It is based on Monday’s final action having trended down, after printing the afternoon’s 1074.00 high before the last hour. So, gapping up above 1074.00 would be likely to trend higher intraday, printing its session high in the final hour (perhaps the final minutes).
Bottom line (My underlying premise)
RSIs were overbought at Monday’s opening surge, so the morning’s drop might have been sponsored by weak hands. The surge itself outlasted the opening 15 minutes of volatility, about 5 minutes too long to simply dismiss its own sponsorship as weak hands. It’s not an issue, and I don’t consider it to be unfinished business. But its 1080.25 high would be the objective if buyers gained traction. Otherwise, the decline’s resumption is still likely.[/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.