Trading Plan for 9/22

[pay]About that close (How the prior session ended)
Monday’s breakout attempt would not be confirmed if Tuesday were to close under 1137.00 – Monday’s last relative low. That’s where the afternoon’s bias environment lapsed. And despite an interim surge to new highs, 1137.00 was tested repeatedly as support through 3:00-3:30. A retest of session lows barely avoided recovering 1137.00, so Monday’s breakout went unconfirmed.

Pattern points (And technical influences)
Tuesday morning’s no-bias signal was suspicious, which undermined my confidence in its 1131.00 objective. The drop’s weak start was followed by a drip, drip, drip into the afternoon that discounted pessimism ahead of the FOMC news. The decks were cleared of all sellers, and a knee-jerk reaction down completed the effort by fulfilling 1131.00.

Consequently, the 13-point rally up to 1144.00 was a reaction to the selling that preceded it. It was not the product of accumulation. Its complete retracement back down to 1131.25 proved this point.

Fully retracing Tuesday’s last upleg also avoided trapping weak longs overnight, whose pent-up selling pressure would have resumed the drop at Wednesday’s open. A retest of Tuesday’s 1144.00 high is possible, especially since it was accompanied by the highest overbought 3-minute RSI. But any rally attempt is likely to fail since it would be launched from a close under 1137.00.

Bottom line (My underlying premise)
A retest of Tuesday’s 1144.00 high can be neutralized overnight. But probing it by more than 2-3 ticks might create a “new Globex trend extreme” that attracts intraday price higher. Regardless, the high’s retest is likely so long as a drop doesn’t gain traction overnight. And a top is likely so long as a rally doesn’t gain traction at Wednesday’s open.

NOTE: The link to “FAQ” on each Bias Parameter post now includes new video tutorials about the indicator. More will become available by Wednesday.[/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.