Stock market price action late Thursday creates possible bullish setup

Price action and setup analysis

If Thursday’s unfinished business below had been left outstanding… then it could have attracted price down overnight to extend the decline. But it was tested into the close. So, not extending down overnight could be bullish.

Pattern points… (Setups and technicals)

Ranging Wednesday was largely contained within Tuesday afternoon’s range. Only a late break probed under its low. And only the latest part of that break. Then, the latest part of that break neutralized “unfinished business below” left outstanding from the morning at 1648.50.

And not left outstanding overnight, which could have ensured extending the decline through Friday’s open. But momentum clearly had difficulties with its test — first bouncing from within 1 tick, then bouncing back above 1648.50 from 1 point below, and finally bouncing back to 1648.50 from touching 1646.00.

Touching 1646.00 was interesting, since that was Wednesday morning’s last relative low. Having touched it, no “hold-short” would be compelling without also closing under it. And the close was AT 1648.50, still testing this objective instead of bouncing off of it — a setup that would be bearish on any close other than right before expiration’s opening rotation.

What’s Next… (Outlook and opportunities)

The bullish WedEx indicator suggests an upward bias Friday afternoon and Monday morning. That could be from much lower levels if Thursday’s drop to 1648.50 doesn’t hold through Friday’s open. Not already declining at Friday’s open would make new highs likely.

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.

About the Author
Rod David

Rod David develops analytical techniques that are designed to efficiently identify targets and turning points for any liquid stock or market in any time frame. He primarily analyzes S&Ps, generating several round-turn candidates daily. Rod publishes "Trading Plan" and more each session at the blog

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