Trading Plan for 9/15
[pay]Pattern notes.
Monday’s buyers did a lot. None of it was new, but clearly there was a lot of effort involved. The cash session’s open immediately set upon rallying back up to Friday’s close. Two brief afternoon surges attacked and probed Friday’s highs. The latter surge was retraced after the cash session close. Also retraced was the probe above Friday’s high.
Only one pullback intraday could qualify as having dipped under a prior low. It formed a pattern that could have bullish if its pullback weren’t shallow. But it broke higher with without refueling buyers. The buying pressure it did have was fulfilled at the session high.
Gapping down immediately at Tuesday’s open wouldn’t be the most bearish scenario. This path would create a gap back to Monday’s 1045’00 cash session close that would inhibit selling. A break under 1039’00 would probably test 1030’50, where a recovery would be likely. An unlikely gap down under Sunday night’s 1025’50 low would allow a downleg to ignore the gap back to Monday’s close. The bigger concern then would be avoiding a meltdown.
Many hours were spent ranging at Sunday night’s lows under 1031’00. It created a mass whose gravitational pull will try to attract price back into its orbit. This is the support that would be offered upon breaking under 1039’00, the first re-entry into this range’s orbit. The second approach would more likely slingshot the trajectory into a new downleg. The rally’s health depends upon getting this retest out of the way sooner rather than later, or never even threatening the retest at all.
Indicators and Internals.
RSIs repeatedly probed overbought territory during Monday’s rally. Each high that required a retst was indeed retested. And each negative divergence did produce a dip. Curiously, RSIs avoided overbought territory when Friday’s prior high was actually probed. This advance notice warned that the close wouldn’t hold the gain, and it didn’t. It also doesn’t form a solid base for launching higher highs.
Tuesday’s opportunities.
The timing of tomorrow’s econ reports is interesting. The immediate concern is how Tuesday’s open incorporates Monday’s late strength. Extending it higher without delay could be self-fulfilling – the speculative bubble would become dangerously inflated, but extreme optimism isn’t necessarily excessive. Gapping down would create a safety net. But ranging sideways before either extending higher or reversing down would be likely to extend in that direction through the morning.[/pay]