Trading Plan for 8/5

[pay]About that close (How the prior session ended)
Wednesday’s last hour was entered testing the 1123.75 bias-up signal. It  was already tested during the noon hour and failed to trigger, and it was too late to ttrigger in the last hour. But its resistance had been chipped away. And the last hour wasn’t likely just to range narrowly into the close.

Whether price firmed or rallied to fresh session highs is not as relevant as the probe’s failure to close above the morning’s 1125.25 high. Buyers gained no traction for their efforts, and there is no requirement to trade any higher.

Pattern points (And technical influences)
Tuesday’s close at 1118.00 combined with it being tested at so many other relevant timing windows, that equilibrium was signaled for Wednesday morning. In fact, there were three wide swings to support, to resistance, and back again.

This included Wednesday morning’s rally to the 1125.00 bias-up target that reacted back down through the 1120.50 bias-up signal. And this is the third rejection of morning bias parameters in a week. Such polar opining tends to accompany major turning points.

The 3:10-3:20 timing window contained a probe of fresh afternoon highs. It was hardly decisive, so not very meaningful. Any follow-through to higher highs does not have that extra degree of confidence.

Having rejected Wednesday morning’s bias-up parameters, Wednesday morning’s 1113.50 and 1108.50 bias-down parameters will need to be tested. If Wednesday’s late-afternoon breakout attempt has already failed, then a drop to 1113.50 and 1108.50 should follow on Thursday. Not trendingf down Thursday would be interesting ahead of Friday’s news.

Bottom line (My underlying premise)
Wednesday’s late rally suggests the ADP surprise – and ultimately holding its gain – is being extrapolated into Thursday’s scheduled jobs data. And that suggests optimism is getting more excessive, and unsustainable. The reaction to Thursday’s reports will help to shape the likely path for Friday morning’s Employment Situation report. [/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.