Economy
Traders were greeted with a sea of red on Monday after 61% of Greeks voted ‘No’ in a referendum asking them to accept an international creditor proposal that would have included more austerity reforms. A couple of emergency meetings are now in the works, including an ECB gathering to discuss emergency liquidity assistance and a meeting between Angela Merkel and Francois Hollande that will review the eurozone’s response to the vote. Meanwhile, Finance Minister Yanis Varoufakis has indicated that he is stepping down from his post due to heavy pressure from Greece’s European partners. Euro -0.8% to $1.1027.
Trading
Price has gapped lower overnight down to key 2030 handle and has since bounced back 25 handles to 2059.25. The Cycle Day 1 Low (2063.25) will need to be recovered during Cash Session to minimize price damage fall out from the GREK No Vote. How investors/traders react during the high liquidity of the day will be an important “tell” going forward.
Today is Cycle day 2 (CD2)…Downside violation levels have clearly been exceeded during overnight trade…We will view this as an aberration and focus on the levels and action for the Cash Session.
Odds of Rally > 10 = 83%; Odds of Rally > 20 = 45%; Average Range = 14.50, Max Average Range = 22.50; Possible HOD = 2085.50 based upon Average Rally; Possible LOD = 2041.50 based upon low violation level.
***Note: The odds highlighted are NOT predictions or trade recommendations, rather a guide based upon historical observed occurrences.
Today’s Hypotheses: September (U) Contract
****This Cycle has been clearly disrupted resulting from geo-political events…Dynamic price levels will be updated throughout the trade session…The numbers in the scenarios are a rough outline of key levels.
Scenario 1: Price will need to hold above 2046.50 on any pullback during cash session to stem any further price damage. Ideally, price recovery back above 2063.25 and convert this level for stabilization. IF this occurs, price projects Three Day Pivot (2068.50)
Scenario 2: Failure to recover, clear and convert PL (2063.25) keeps ball squarely in the Bear Camp…Subsequent violation of 2046.50 potentially forces liquidation targeting 2041.50 then 2034.50.
Trade Strategy: Our tactical trade strategy will simply remain unaltered…We’ll be flexible to trade both long and short side from Decision Pivot Levels. Continue to focus on Bull/Bear Stackers and Premium/Discounts. As always, remaining in alignment with dominant intra-day force increases probabilities of producing winning trades.
Stay Focused…Non-Biased…Disciplined ALWAYS USE STOPS!
Good Trading…David
“Knowing is not enough, We must APPLY. Willing is not enough, We must DO.” –Bruce Lee