Trading Plan for 8/28

If strong hands want to reduce exposure into the weekend… then they’ll force Wednesday’s close to close under relevant support. Wednesday morning’s sell-off probably wasn’t sponsored by strong hands, since it stopped short of even touching the bias-down signal. The afternoon’s sell-off probably wasn’t sponsored by strong hands, either, since it was retraced entirely.

Pattern points… (Setups and technicals)[pay]
None of which prevents probing lower lows intraday Thursday or Friday. After all, while sellers have failed to break under a relevant support, buyers have so far failed to exploit that. One more dip wouldn’t be surprising, but one more dip should be the last.

One more dip isn’t necessary before recovering to retest Tuesday’s 2002.75 high. Regardless, one more dip within the context of trapping shorts should develop at Thursday’s open, if at all. Not recovering through Thursday’s open — or probing Wednesday’s 1994.25 support on Friday — would be less recoverable.

Oversold RSIs at Wednesday’s 1993.50 low require an eventual retest. The optimal pattern in keeping with these inputs and influences would retest it overnight and greet Thursday’s open in recovery mode, rallying sharply through the morning. The optimal pattern for launching a downleg despite being so late would simply trigger Thursday’s bias-down.

[/pay]What’s Next… (Outlook and opportunities)[pay]
One reason strong hands tends to express itself by Wednesday’s close is that volume starts evaporating much earlier ahead of a three-day weekend. Similarly, if you’re trading options, beware of accelerated premium decay. Meanwhile, econ reports aren’t slowing down, so they’ll have greater impact on price action. [/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.