Short-Term Cycle High

Yesterday’s price action was text book Cycle Day 3 (CD3). Having achieved cycle targets on CD2, price retested cycle high at 2010 and failed to convert higher. This setup a reversal condition which was triggered on violation and conversion of the 2003 “key marker”. It was all downhill from there as price ultimately hit exactly to the tick (1990.75) Average Decline measurement. We will now mark the 2010 double top as Short-Term Cycle High. Longer-Term Bull Structure remains largely intact, but additional selling pressure may begin to develop in coming days/weeks to challenge the bull’s resolve.

Today begins a new Cycle and with yesterday’s initiating selling from double-top (2010), we would expect increasing number of sellers wanting to either hedge long positions or simply book some long profit. Key Structural Support Zone is marked between 1982 – 1988…Bulls will need to absorb any additional selling within this zone, otherwise a deeper correction with long liquidation may unfold.

Odds of Decline >10 = 70%; Odds of Decline > 20 = 40%; Average Decline on CD1 = 13.50; Max Decline on CD1 = 21.25; Average Range = 18.75; Max Range = 22.00

***Note: The odds highlighted are not predictions, rather a guide based upon historical observed occurrences.

Today’s Hypotheses:

Scenario 1: Price is currently trading near Prior Day Low (1990.75)…IF price can hold this level, THEN there is a 55% chance of getting back up to 1996 – 1998 zone, where we would anticipate a sell response. The 3D CPZ (1999.75 – 2001.25) becomes “key resistance marker” on any rally attempt.

Scenario 2: The current low as of 8:00 am ET is 1988.75 which is price target based upon the historical observation Max Decline of 21.25 handles on CD1. Here’s the calculation: Prior Day High (2010) minus Max Decline (21.25) equals 1988.75. Current LOD = 1988.75. IF this level can hold in pit session, THEN price can rally as laid out in Scenario 1. Violation and conversion of this level measures a breakdown target zone between 1984 – 1980.

Trade Strategy: We will remain cautious bulls with prices testing key structural support zones…As intra-day traders, we are flexible to consider either long or short, but primarily stay aligned with dominant force throughout the session. Our trade discipline keeps us seeking the very best qualified Bull/Bear Stackers, Premium and Discounts.

Keep Focused on the Trading Process…Not the Outcome…ALWAYS USE STOPS!

Good Trading…David

Habitude Ten
I know anything can happen, and I can handle anything that does happen. I am open minded. My thoughts and perceptions are clear. I know what to look for. I have rehearsed everything. I adapt to change. I will listen to my indicators and the patterns that emerge. I will adjust and not demand that things continue as they first started.




Leave a Reply