The probe for a secure low on Cycle Day 1 (CD1) yesterday unfolded as expected retesting critical Average Range Levels and Prior Session Low. Remember, the goal of CD1 is to find a “secure low” from which to stage the next auction rally…which is exactly what we wrote about in yesterday’s Daily Trade Strategy. Expectation on CD2 is for continued strength to reach Cycle Targets between 1939.50 – 1945.75.
Overnight price action is higher by approximately 7.50 handles at 1939.50, which is the initial Bullish Cycle Price Target. Current momentum if it carries into the Pit Session has potential to reach to upper 3 Day Cycle Target of 1945.75.
Bullish 3-Day Cycle Price Target Zone = 1939.50 – 1945.75; Average Range on CD2 = 14.50; Max Range on CD2 = 22.50; Odds of Rally > 10 = 83%; Odds of Rally > 20 = 45%; Average Rally on CD2 = 15.50
***Note: The odds highlighted are not predictions, rather a guide based upon historical observed occurrences.
Today’s Hypotheses:
Scenario 1: Price has already reached ti 3D Bullish Cycle Target of 1939.50 in Globex…IF price momentum can continue to build during the Pit Session, THEN there is a 60% chance of reaching 1941.75, followed by Xtreme zone between 1944.00 – 1947.00.
Scenario 2: Having reached CD2 price target and prior day high at 1941.00, failure to convert current momentum into higher prices would warrant a pullback into dynamic Fair-Value Zone between 1935 – 1936 for renewed buy response. Violation of this zone would suggest deeper pullback into 1930 – 32 zone for next line of support.
Trade Strategy: Current price momentum favors the bullish trade, and as such we will search of long-side opportunities on pullbacks to key Decision Points (DP). This does not preclude taking short-side trades on failures to expand higher with valid setups. Cycle Day 2 (CD2) can be tricky since cycle targets have already been reached in early trade, so some choppiness may be the result…BE FLEXIBLE…TAKE THE TRADE!
Follow the Trade Rules…ALWAYS USE STOPS!
Good Trading…David
Habitude Seven
I take the long term view. I am willing to lose in the short term. I understand that losses are a necessary cost of doing business, like inventory to a merchant. Drawdowns are viewed as temporary. I realize that my wins and winning periods are part of the broad process. Each trade is but one in a string of trades. What is happening now is one piece of a much larger puzzle. Because of this I do not get overly euphoric or despondent.
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS