Trading Plan for 9/10
If recent highs still intend to be tested… then Tuesday’s drop can’t extend any deeper for any longer. The afternoon’s lows attacked critical support that defines the uptrend. No prior close is near enough to be broken and to confirm the trend is reversing down. But two-week old intraday lows were probed, and closing any lower would force the market to look much lower for new buyers.
Pattern points… (Setups and technicals)[pay]
Aug 28 gapped down to test the 1987.00 area. That was a test of the prior week’s “lower prior highs” down to 1985.00. Its test resolved in fresh highs. The 1987.00 area held another test at Friday’s open. But that did not resolve in new highs before being revisited Tuesday, so the redundancy isn’t necessarily bearish.
That is, not if rejected without delay. And there is already a delay.
1987.00‘s test could have been rejected Tuesday by recovering its prior resistance at 1992.00 during the same timing window that had probed under it. Too late for that. Wednesday’s open can compensate for the delay by immediately recovering the next higher resistance above 1995.75. At least that is Tuesday’s noon hour high, and Tuesday morning’s bias-down signal. It’s also a 61.8% retracement of Tuesday afternoon’s first downleg that reversed its earlier no-bias trending.
The area of Tuesday’s close is likelier to repel price than to attract it, so Wednesday’s close should either trend deeper into negative territory, or else retrace much of the recent decline.Recovering early wouldn’t be bullish without also extending higher through the bias environment and/or noon hour. Early strength that hesitates to extend higher would be vulnerable not only to retracing, but to reversing down into a new downleg.
[/pay]What’s Next… (Outlook and opportunities)[pay]
Sellers already have control, and need only prevent buyers from regaining it. Whether rejecting a bounce or simply extending the decline, selling should accelerate its pace if buyers aren’t regaining control of Wednesday’s open. A recovery leg need not be aggressive once it has recovered back above Monday’s late 2002.00 close. [/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.