Trading Plan for 9/9
If Friday’s new trend high close were not under two prior intraday highs… then the traction it gained could have prevented Monday’s downdraft. Or, it would have let the downdraft take more room and more time to extend down. But by being only a little of both — retracing much of its dip, during much of the bias environment and into the close — weak-handed buyers are still being sucked in, and sellers haven’t yet applied pressure.
Pattern points… (Setups and technicals)[pay]
Friday’s recovery from probing fresh lows reversed back into positive territory. Monday’s post-open surge touched the 2006.25 target from Friday afternoon’s rally, and then reversed down sharply. The two really aren’t very different at that point.
But then RSIs became overbought at Monday afternoon’s 2001.75 high. RSIs did diverge negatively on its retest, but its retest was so near the close as to be considered irrelevant. Counter-trend sponsorship just doesn’t start a new job that late in the day. Although the overbought RSIs don’t require a retest, its 2001.75 high should be retested anyway.
Friday’s recovery never took RSIs overbought at all. So, its buyers never entrenched themselves. At least Monday’s buyers laid the groundwork for absorbing a dip.
And Monday recovery stopped pessimistically short of fulfilling its potential to 2002.25. Not Friday’s recovery, which managed a last-minute surge to fulfill its afternoon target. That wasn’t very self-preserving. But Monday’s recovery has reason to extend. Meanwhile, attractions to retest last week’s highs remain intact.
[/pay]What’s Next… (Outlook and opportunities)[pay]
Sellers didn’t gain traction for the effort Monday. But probing overnight above Monday afternoon’s highs — presumably including 2002.25 — would be vulnerable to trending down through Tuesday’s open. Otherwise, not already trending down would be likely to probe fresh highs intraday.[/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.