Markets reacted positively to FED Policy Statement yesterday pushing price to to our Cycle Xtreme Target Zone between 2002.25 – 2004.25, as Scenario 1 played out perfectly. Review here: Trade Strategy 09.17.14
Today begins a new cycle…Normally we’d be anticipating some price weakness to find a new secure low…IF current bullish momentum remains strong, any pullback my be relatively shallow. We anticipate an early test of prior day high before any pullback unfolds.
Today is Cycle Day 1: Average Decline on CD1 = 15.50; Max Decline = 21.25; Odds of Decline > 10 = 70%; Odds of Decline > 20 = 40%; Average Range = 18.75; Max Range = 21.75.
***Note: The odds highlighted are NOT predictions, rather a guide based upon historical observed occurrences.
Today’s Hypotheses:
Scenario 1: Bullish momentum is solidly intact…Key level for price to hold above is 1994 handle…Early anticipation is for price to test PDH (2003.25). Penetration and conversion of this level targets STATX Zone (2004 – 2006.25), followed by 2009.00 TargetMaster Breakout Level, with Range Xtreme measuring 2010.75 – 2012.
Scenario 2: Failure to convert PDH (2003.75) suggests the need to digest gains realized post FED. Initial support will be 1996 – 1998 VTMP Zone…Key Support Marker is 1994 handle. Violation of this level targets 1988 handle followed by 1986.50, then 1984 – 1982 STATX Zone and 3DCPZ confluence zone.
Trade Strategy: Range and volatility have sharply increased providing fast moves in price…We must remain disciplined by staying aligned with dominant force and aggressively take valid Stacker and Premium & Discount Setups. We will actively update Dynamic S&R Zones throughout the trade session.
Stay Focused…Take the Trade…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