Trading Plan for 8/6

If Monday’s high were just 1 tick higher… then it would not be considered an inside day. That’s not in itself bullish or bearish. But after consolidating narrowly the prior day, and still not confirming the previous day’s breakout, it does suggest the rally’s sponsorship is thin.

Pattern points… (Setups and technicals)[pay]
Monday’s range bound session did accomplish one thing toward defining the bigger picture. And it did that simply by touching Friday’s 1705.00 high. Actually, by only touching Friday’s high.

Monday’s open tested the 1698.50 bias-down signal to within 1 tick. Its recovery retraced all the way back to Friday’s high, and only touched it. The obligatory resistance triggered the predictable pullback. But the pullback never recovered.

Obligatory resistance that lasts through multiple timing windows has more relevance. Eventually breaking higher would be that much likelier to react back down under 1705.00 before extending too far, for too long. This will be important to calculating a breakout’s ultimate objective.

[/pay]What’s Next… (Outlook and opportunities)[pay]
The attraction to 1705.00 cuts both ways. In case breaking higher were further delayed by dipping deeper Tuesday — perhaps to neutralize the oversold RSIs at Monday afternoon’s 1699.50 low — then 1705.00 would likely attract price back up to it. [/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.