Trading Plan for 9/29
[pay]Pattern notes.
The mice did play Monday, taking advantage of the session’s reduced participation. This exacerbated a perfect storm that neutralized selling pressure and triggered uying pressure. But, it’s not clear whether the storm would have arisen at all otherwise.
Friday’s bias-down rally was retraced Sunday night to neutralize that objective, and Friday’s 1036.00 low was retested while RSIs diverged positively to trigger a bounce. Had this happened Monday morning, then the slower day would have inhibited a decline, and prompting a bounce back to the range’s 1049.00 upper-end.
The “perfect storm” was created by altering the timing. This allowed a third factor: opening strength. Not just opening strength that would have faced the same fate as opening weakness, but opening strength with two tailwinds (neutralized business below, and upward momentum into the open). Thin volume exacerbated the output.
Monday’s optimism was not excessive for its inputs. But its inputs weren’t representative of full participation. Its rally can’t be labeled as excessive optimism, but neither was it accumulation.
Closing under 1052.25 is the difference between sellers retaining the traction of last week’s drop, or losing it. Even then, a close above 1062.25 would be needed to signal buyers had gained traction. Anything in between could still be reconciled through the following session’s open. Regardless, not extending higher Tuesday – and maintaining the gain on a closing basis – would suggest that sellers were regrouping for another attempt at sealing a top.
Indicators and Internals.
Numerous setups overnight and Monday morning were predictive. A mid-afternoon setup also identified a brief bounce. But no business was left outstanding to attract price one way or the other Tuesday. An 3-minute RSI avoided any buying or selling pressure all afternoon, so another signal might not come very soon Tuesday.
Tuesday’s opportunities.
After Monday’s blank econ calendar, things do get interesting. The session’s first trending effort should be taken with a grain of salt, considering the levels being tested and recovered (or not), and the timing of news. I’ll update again after midnight if price action merits it.[/pay]