Trading Plan for 8/8
[pay]Pattern notes.
Wednesday’s retest of prior highs might have sufficed after all to complete the corrective bounce. Choppy overnight price action entered the cash session plummeting 17 points under Wednesday’s close and ended the day bouncing from a 25-point loss. The interim price action was a frustratingly difficult 6-7 point range around ESu 1278’00-1279’00 that resumed the decline with a vengeance.
The low was a retest of the 1264’00 area that has been influencing price action for weeks. It also stopped short of testing the 1260’00-1263’00 area that had been the original corrective bounce target from last month’s low. It has been exceeded twice, both times briefly.
Thursday afternoon’s slide started so late that it can be forgiven for lacking time to extend just several more points to 1260’00-1263’00. But the slide started so late because optimism delayed the decline’s resumption. The resumption remains likely so long as bounces hold any brief test of 1272’50-1273’00. The next bounce potential would be from 1259’25, which will probably resolve down to 1248’00-1249’00. But back above the 1280’00 area would start looking bullish instead.
Indicators and Internals.
Four times more down volume than up volume produced 3 times more declining issues than advancers, inverse from Tuesday’s rally. Why not expect the inverse reaction and reverse up? Tuesday’s trending was countered by nominal resistance, making the session’s narrow internal spreads underwhelming. But as can be attested by anyone who watched Thursday’s session, and watched, and watched, and -oh, wait! no- and watched, sellers absorbed considerable buying pressure. By the way, 3-minute RSI narrowly missed its lowest oversold reading at the price low. The low is still likely to be retested, but not required.
Friday’s opening setup.
The econ calendar is relatively light. This being a Friday, the morning’s bias signal is likely to influence price action well into the afternoon. So if sellers don’t reassert their control early enough, the balance of the session could resemble Thursday’s midsection.[/pay]