Average Daily Range in S&P e-mini continues to contract from a high of 20 handles down to 11 handles over the past ten (10) trading sessions, as price continues to grind higher to new contract highs. Below average volume suggesting low institutional participation is typical of August, as money managers take vacations and trading desks are lightly manned.
Contracting trading ranges and lowering volumes make it a bit more difficult for intra-day traders to execute their trade strategies…So what’s a trader to do?…Simply adjust trade expectations and positions sizing to reflect lower volatility. Remain Flexible and Follow Trading Rules!
Today is Cycle Day 3 (CD3) and there remains potential for higher prices during this current cycle. Average Range on CD3 = 17.75; Odds of 3D Rally > 10 = 82%; Odds pf 3D Rally > 20 = 54%
***Note: The odds highlighted are not predictions, rather a guide based upon historical observed occurrences.
Scenario 1: Prior Day High (2002.75) IF price converts this level, THEN there is a 60% chance of continuation higher to reach STATX Zone 2003.75 – 2004.50, followed by TargetMaster Breakout Target 2007.75 – 2008.50 zone, with Xtreme Target 2010.50.
Scenario 2: Failure to convert PDH (2002.75), suggests continued consolidation within recent ranges. Key Marker is 1998 handle which is Prior Day Open Range Rotation Average (PDORR). Violation and conversion of this levels suggests a short-term high in place and a corrective pullback is necessary to find renewed buy response. Key zone to be mindful of on pullback is 3DCPZ 1991.00 – 1993.25.
Trade Strategy: As stated above, low volumes and range make it increasingly difficult to execute trade strategies…So we will continue to focus our attention staying in alignment with dominant force and tread lightly with trade selection. This is NOT the time to be a “bold” trader and force trades…Remain Disciplined…Patient…ALWAYS USE STOPS!
I think in terms of probabilities. I do not know, all I have are probabilities. Probabilities are at the core of my decisions. Through consistent application of the probabilities, I will win.
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS