Trading Plan for 9/1
[pay]Pattern notes.
Monday’s open gapped down to the range’s lower-end. The Trading Plan had noted that a gap down under the week-old range might break free from its gravity. Sliding 6-7 points from the open did damage the chart, chipping away at the support of Thursday’s prior lows. But it was another warning shot across the bow at buyers, and not a direct hit.
A last-hour dive could have materialized since the interim price action was lifeless. Indeed, a dive did materialize, reacting down 5 points from a blip up when the afternoon’s no-bias environment lapsed. That also left its market on the chart, despite recovering the spike as quickly as it had developed, and despite extending the recovery up to new session highs.
If not for that late damaging dive, a close above 1018’00 would have all but required one more corrective bounce – albeit within the range, but a bounce, nonetheless. The close did recover 1018’00, after the late spike down had dropped another anchor down to 1015’00. Another corrective bounce then became less likely, likely to be brief if anything, and likely to trigger a durable breakdown when complete. What’s the bullish strategy, if a corrective bounce is only going to end poorly? Simple. Don’t rally.
At least, not immediately. Monday tried that, probing last week’s lows without letting sellers gaining traction. Monday also spent the entire session in negative territory for “ineffectual pessimism. That last element isn’t crucial, but restraining both buyers and sellers at this stage would be bullish. Otherwise, without a near-term bounce to refuel sellers, a new downleg would almost require nothing less than a gap down to begin.
Indicators and Internals.
3-minute RSI only touched overbought and oversold limits after Monday’s open, but they never probed either. There wasn’t much difference in 1-minute RSI. Any trending attempt in that environment would be only a reaction, whether up or down or both. Regardless, no new business was created, let alone left unfinished to attract price.
Tuesday’s opportunities.
The econ calendar is a potential minefield, see my notes here. Extending down from Monday’s pattern all but requires gapping and extending down through the lows. So long as an opening drop wasn’t recovered, a session long decline would be possible. There is various support below, but very little that isn’t obligatory and temporary. Meanwhile, the gap back to Friday’s close doesn’t require being filled, but one more test of 1025’00-1027’00 can’t be discounted.[/pay]