Trading Plan for 9/28
[pay]Pattern notes.
Friday morning’s price action didn’t venture from the overnight range. And that range didn’t venture from the range in place since Thursday morning’s steep drop. That steep drop was actually an extension from Wednesday afternoon’s steep drop. So, in 24 hours, there had been no refutation of a 3-hour, 32-point plunge.
Friday’s noon hour did start out with this message in mind, dipping 4-5 points under prior lows. A recovery at this stage would refute both last week’s plunge, and Friday’s lower low. So, how’s that going?
The noon hour low remained depressed long enough to signal bias-down, but a rally emerged anyway. That would seem on its face to be bullish, but the rally peaked upon testing Thursday morning’s low as resistance. Perhaps this leg’s intention was to chip away at resistance for now, and break through it more easily later. Then it would have been helpful to close solidly above Friday’s lows. But Friday’s lows were still being tested at the close.
The drop’s initial 1039.00-1041.00 target did hold, but only after a second day did of testing chipped away at its support. Since Friday’s lows were still being tested, sellers gained no new traction. But they already have traction, the burden of proof is on buyers.
Indicators and Internals.
Friday’s intraday price action responded to several technical setups. None left outstanding any unfinished business either above or below.
Monday’s opportunities.
Friday afternoon’s rally originated during a bias-down environment, requiring its complete retracement. It was retraced back down to the 1039.25 bias-down signal, which can suffice to retrace a bias-down rally. But its 1:20 print is often retraced, too, which would be back down to 1037.50.
Its retest Monday morning could produce a bounce, since the Yom Kippur holiday slowdown will make trending difficult, and no econ report is due. A gap up that holds Friday afternoon’s ~1045.00 high would be likely to drop back down to 1037.50. A gap up or immediate recovery above 1045.00 could trigger a session-long rally, which thin volume could either exacerbate or undermine. [/pay]