Trading Plan for 8/8

Tuesday’s session-long rally setup… was fulfilled. The entire session remained in positive territory and no prior low was broken. However, the session high did not print during the final hour, which was not optimal. Was selling pressure that substantial, or will Tuesday’s high be probed with a vengeance?

Pattern points… (Setups and technicals)[pay]
Like the final hour’s session high print, session-long rallies have another element yet to be seen: The following session tends to probe higher highs. Not just pierce the prior highs, but actually try trending higher. And like the other missing element, this is also not a requirement, only a tendency.

I wouldn’t even be bothering with any potential for fresh highs, if the setup had failed to produce its two required elements (trading exclusively in positive territory, without sellers gaining traction). The setup was valid, so it can still probe fresh highs.

Trending attempts above Tuesday’s highs would become less likely if not being attempted into Wednesday’s open. And there is potential simply to gap down and extend Tuesday afternoon’s drop. Especially since Tuesday afternoon’s drop was more than noise, having exited the bias environment under the noon hour low, and entering the final hour under the bias environment low.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Tuesday’s sellers didn’t gain traction, because the morning’s 1397.50 last relative low was not broken through the close. It was still being tested, and it was later probed down to 1395.75. Gapping down Wednesday under at least 1393.50 would make Tuesday’s session an Island, and reverse momentum down sharply. Otherwise, almost any shallower opening weakness — if any, at all — would be likely to probe Tuesday’s highs. [/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.