Trading Plan for 8/26
[pay]Pattern notes.
Tuesday’s open gapped up. The intraday high probed prior highs. The entire session was spent in positive territory. That’s a lot of optimism. But buyers didn’t gain any traction, so it was “ineffectual optimism.” The market is immediately vulnerable to a downleg, and any interim bounce is likely to fail.
The afternoon low filled the gap back to Monday’s close. Natural support there produced a bounce that could have lifted price away from the risk of a downleg. But the bounce peaked upon testing the afternoon’s prior high, and the filled gap was tested again into the close.
Friday afternoon’s 1027’00 high held as resistance through Monday’s close, failing to confirm Friday’s breakout attempt. Now it has held again through Tuesday’s close. Price action above 1027’00 is distribution, which is the great majority of price action since Friday afternoon. Two consecutive attempts have failed to trend higher from Friday’s breakout attempt. It is one thing not to confirm the breakout. It is another thing not to use that time for a pullback to refuel buyers. Instead, buyers have been expending their energy just to tread water.
The actual breakout activity above 1015’00 amounts to a 20-minute surge after Friday’s opening gap up to 1013’75. This area’s eventual retest is likely in almost any scenario. Testing it sooner rather than later might still be able to recover for a better breakout attempt.
Indicators and Internals.
RSIs were simultaneously oversold at the 1018’25 overnight low. Being overnight and not intraday, its retest isn’t as likely, but it is still likelier than not. Overbought RSIs at Tuesday’s 1038’00 high don’t require a retest since they were the product of a news spike. But its retest would be a likely objective if buyers were to catch a second wind Wednesday.
Wednesday’s opportunities.
A gap up above Tuesday’s 1030’25 last-hour high would be likely to extend intraday, with potential to retest the morning’s 1038’00 high. But almost any opening weakness, perhaps even overnight, is likely to be productive intraday Wednesday. The calendar isn’t empty, and that has been helpful to the rally recently, although the gain resulting from Tuesday’s reports wasn’t very long-lasting. [/pay]