Trading Plan for 8/28

Monday’s open rejected a second chance… at neutralizing the attraction back up to Tuesday’s opening gap. The first chance was Wednesday night. Monday’s second try means that a third had better succeed quickly to avoid launching a multi-session decline.

Pattern points… (Setups and technicals)[pay]
Friday’s close ended the day testing the morning’s 1408.00 high, signaling that buyers gained now traction for their efforts. Monday’s close was also testing 1408.00. Closing under it would have signaled that sellers gained traction for their efforts. It held.

1408.00 had been thoroughly tested Monday morning by the reaction down from 1416.00. There was no bullish reason to revisit it. It wasn’t even likely to offer much if any support. It held.

Closing under 1408.00 would have offered a compelling “hold-short” setup. As you may be aware already, it held. Probing under it overnight could test 1406.00 or 1402.00 and still recover. But opening any lower Tuesday would target fresh lows under 1395.00, and potentially under 1391.50.

Gapping up Tuesday above Monday afternoon’s ~1413.00 high would trigger a “session-long rally” that targeting at least 1419.00. Opening less strongly could still extend higher, but not as reliably.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Tuesday’s econ calendar is relatively busy and high-profile. The GOP convention begins. And a hurricane may be forming in the Gulf. Meanwhile, the pattern has been very flexible, so continue to beware of false starts.[/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.