Trading Plan for 8/7

If Wednesday’s opening surge had not been so productive… then would the afternoon have resumed the rally, and extended it even higher?

Pattern points… (Setups and technicals)[pay]
Wednesday morning’s rally was substantial. It gained 18 points from the 1905.50 open, and the open was already above the 1903.00 pre-open low. Probing above the 1918.50 bis-up signal during the no-bias environment was retraced as required, when required. The rally could have extended higher. But it did not.

Was that bearish, or was it “ineffectual pessimism”? That depends on the reaction down.

The balance of the session did remain under pressure, exiting the bias environment under the noon hour’s low. But that didn’t extend, and nothing else about the afternoon was bearish. It didn’t even return to negative territory.

Strong-handed sellers would have exploited the opportunity. Meanwhile, patient buyers resisted exploiting the afternoon’s weak-handed sellers. That last statement will need to be proved at Thursday’s open. Having failed to gain traction Wednesday, resuming the rally immediately Thursday would require gapping up.

It probably is an either/or situation. If not already rallying at Thursday’s open, then at least a retest of Wednesday’s 1903.00 pre-open low will be likely. And a retest of Wednesday’s low at this stage would be vulnerable simply to resuming the decline.[/pay]What’s Next… (Outlook and opportunities)[pay]
As we’ve been discussing during the Market Tours&Wraps, Thursday morning’s BOE and ECB policy announcements are hitting currencies at interesting points in their patterns. I’m reasonably certain the event(s) will figure into the day’s timing and 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.