A funny thing happened on the way… to rejecting Thursday’s probe above prior highs. Rumors of of coordinated global intervention took a perfectly fine 10-point drop, and stopped it 6 points short while reversing it into a 14-point surge. New game, or just a delay?
Pattern points… (Setups and technicals)
Since the Wednesday Expiration Indicator controls Friday afternoon and Monday morning’s bias, it is unaffected by Thursday’s late surge. Tests of prior highs remain likely to hold as resistance. And sellers should be rewarded eventually for absorbing the tests.
Gapping down under Thursday afternoon’s lows not only would reject Thursday’s buyers, but also reverse momentum down. And being a Friday — an expiration, no less — the morning’s bias would be likely to persist through the noon hour, compensating for Thursday’s late detour.
Meanwhile, so long as we’re in the neighborhood, the gap back to Monday’s 1329.50 gap up should be filled. It is only a natural attraction, and not a pattern’s requirement. But its test is likely so long as Friday’s open doesn’t reject Thursday’s breakout.
What’s Next… (Outlook and opportunities)
1329.50’s test could be fulfilled overnight and then rejected before Friday’s open. Similarly, the late intaday surge could be retraced overnight. We’ll continue to expect a downward bias into the weekend, but that would be difficult if the morning were to rally to new highs.
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.