Trading Plan for 9/14
[pay]About that close (How the prior session ended)
The late-morning dive to 1110.75 required a retest for its simultaneously oversold RSIs. Meanwhile, they made the pattern vulnerable to bounce. Firming throughout the no-bias environment made the bounce unlikely to gain traction. But the window for sellers to gain traction had essentially closed. So the balance of the session rallied back to the morning’s 1118.50 target.
Pattern points (And technical influences)
Reversing down at Monday’s open was very unlikely. Friday’s rally had left targets outstanding up to 1110.00. Its test at Sunday’s open rallied further after holding briefly as support.
But extending higher had no traction from last week to create a durable rally. Friday’s highs had stopped short of probing Thursday’s 1106.00-1107.00 prior high, let alone closing above it. Now Monday’s highs have held 1117.00 prior highs throughout multiple morning checkpoints, and then at the close. Again, buyers gained no traction.
The rally could advance again, and again fail to retain any improvement above the open. Gapping up Tuesday might extend higher intraday, but it would likely Double Top with August’s highs.
Gapping down under last week’s 1106.00-1107.00 highs would form an Island of Monday’s pattern. And having formed within the range of consolidation at August’s highs, the Island would not require being retested. Meanwhile, a drop would unfold fast.
The bullish path would more likely dip to test last week’s 1106.00-1107.00 highs as support, and then launch another rally leg above August’s highs. It might suffer the same fate as if gapping up Tuesday, but it would at least buy the rally more time.
Bottom line (My underlying premise)
Several consecutive sessions that fail to gain traction are not a sell signal. They just warn of a sell coming. And if failing to gain traction couldn’t prevent gapping up, then an uptrending morning sponsored by weak hands is common. Alternatively, a sudden dose of reality from a steep morning fall. [/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.