Multiple bearish influences weighing on price action

Price Action & Setup Analysis

If Friday’s target were met before the final 3 minutes… then holding its last-minute test would have been relevant to the hold-short setup. But there are multiple bearish influences in-play.

Pattern points… (Setups and technicals)

Friday’s session-long decline fulfilled its normal traits: gapping down under prior lows to reject the prior session’s closing rally, printing a fresh session low during all but one intraday timing window, and even ticking down into the close. Here’s something else a session-long decline tends to do:

Extend down the following morning. Not probe fresh lows, and not momentarily, but trend, with some sort of complexity. Weekends can mitigate that momentum. A lot of Friday setups don’t survive into Monday, because they’re formed by artificial buying or selling pressure that skittishly reverses when the week begins.

This one seems more real. The beat-the-weekend crowd probably expended themselves Thursday and Friday morning, and that didn’t stop price from falling further. A two-day plunge through support into the weekend often reflects sponsorship intent upon extending. The only reason not to be positioned too bearishly is that not already dropping substantially at Monday’s open would likely be due to an equally substantial gap up underway.

What’s Next… (Outlook and opportunities)

We’re back this weekend for the Saturday Strategy Session. It begins at 9:30am, and its entry point is linked from the blog’s sidebar. The recording will be available later, but attendees will be able to discuss the bigger picture, and to request instant analysis of any chart.

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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