Thursday’s trade action was a picture perfect Cycle Day 1 (CD1)…Odds favored a decline greater than 10…As price extended down to violation target of 1982.50 outlined in prior DTS 01.29.15. Once the last seller sold, Mr. Market, being more confident of a “secure low”, proceeded to aggressively bid up contract price, sparking a strong rally, driving prices 37 handles to settle at high of day.
Today is Cycle Day 2 (CD2)…The Average Rally of 23.50 handles has clearly been exceeded on CD1…Expectation for today would normally be looking for some back n fill to absorb recent gains…We will stick with this assumption, but be mindful that momentum can continue to be strong.
Odds of Rally > 10 = 83%; Odds of Rally > 20 = 45%; Average Range on CD2 = 14.50; Max Average Range = 22.50; Possible High = 2028.50 based upon average penetration of CD1 high; Possible Low = 1965.22 based upon average violation of CD1 low.
***Note: The odds highlighted are NOT predictions or trade recommendations, rather a guide based upon historical observed occurrences.
Today’s Hypotheses:
Scenario 1: Price has closed at PDH (2019.50)…Residual momentum may continue to push price higher…IF price can clear and convert PDH (2019.50), THEN there is 55% chance of reaching expansion target of 2028.50.
Scenario 2: Assumption today is initially some “back n fill” price action to absorb recent price gains…Failure to convert PDH (2019.50), suggests the need to pullback to find renewed buy response for this cycle. Levels to be mindful of on retracement are 2001.00 – 2005 zone…Below this zone is VTMP 1997 handle, then 1992 – 96 HVN. Below this level targets LOD and potential for violation expansion targets 1970 – 1964.
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
Habitude Five
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.