Today is another Spike and Trend Channel day. Spike and Channel Rules apply. The morning started with a nice spike higher that ended in a Micro Double Top and Wedge. We then got the spike pullback, ending in a Micro Double Bottom and Wedge, which began the Spike Channel. A Spike Channel normally has three pushes up, which in this case formed a larger wedge into yesterday’s high. From there, we expect a test of the beginning of the Spike Channel, which has just been completed. Typically, the market does a 2-step correction into that point, which is now likely to form the bottom of a trading range for the rest of the day.

While it is possible that the market can move on to new highs from here, that is not the typical response. Usually, it recovers about 25% or more and then stays in a trading range for the rest of the session. Perhaps that would be expected anyway, given that the market will likely mark time on the clock until tomorrow morning’s employment report.

I earlier published the Head and Shoulders reversal pattern still forming on the hourly chart. The market appears to need tomorrow’s report as a catalyst to break the range, hopefully to the upside, but I cannot rule out a reversal.

I have booked about 14 points per contract today, and I likely will not trade the rest of the day after I take profits on my current long position.

A.F. Thornton