Trading Plan for 8/26

If not for another geopolitical headline… then — but, wait, there was no such news. Actually, there was a headline in the Ukraine-Russia conflict, but the market ignored it. At least, it didn’t react down. Perhaps the news was effective, anyway, in preventing the morning’s rally from extending. Is that what prevented the rally from extending?

Pattern points… (Setups and technicals)[pay]
Monday’s 1995.75 opening gap up was above all prior highs. That’s also where the cash session closed. There was no net gain, despite gapping up and probing higher highs. It wouldn’t very optimistic, except that the entire session was spent in positive territory.

This pattern can form an Island Reversal. but it requires the next session to gap down under prior highs. Maintaining a gap down under 1990.00 would trigger multiple consecutive sessions trending down. An eventual recovery would be likely.

Not gapping down would at least target a retest of Monday’s 1999.75 highs which formed a Double Top, presumably visiting 2003.50 in the process. The pattern is often retested, although that’s not required

[/pay]What’s Next… (Outlook and opportunities)[pay]
Tuesday’s econ calendar is the week’s busiest, but not necessarily its most dangerous. Keep in mind that with the impending three-day weekend, a trend reversal will need to be obvious by Wednesday’s close or else sellers may be marginalized until next week.[/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.