Trade Strategy 10.06.14

Last week’s trade action was nothing short of exciting…Some people would classify it as a wild roller coaster ride…others call it the “vomit comet”. In either descriptive, it was quite the ride. October is here and historically this month has seen its share of spectacular ups and downs. Volatility has been on the rise, with the 10-day ADR now registering 21.25 handles. Expectation is for continued wide swings in price, so if you enjoy ride, embrace the action…if you don’t, then it might be best to sit it out. But as intra-day traders, volatility is the name of the game to profit. ENJOY THE RIDE!

Price is trading higher (+7.00) in early morning trade, as prior day momentum continues. Having retraced approximately 75% off of last weeks low, expectation is for responsive selling to re-enter near current levels. It would take an aggressive move above 1978 – 80 zone to make shorts nervous.

Today begins a new Cycle (CD1): Odds of Decline > 10 = 70%; Odds of Decline > 20 = 41%; Average Range on CD1 = 18.75; Max Range = 21.75; Possible Low = 1936.50 – 1928 based upon violation of PDL; Possible High = 1970.50 based upon penetration and conversion of PDH.

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

Today’s Hypotheses:

Scenario 1: IF price can penetrate and convert PDH (1964.50), THEN there is a 45% chance of reaching 1970.50 – 1973.00 zone. Above this zone targets 1980 TargetMaster Breakout Level.

Scenario 2: Failure to hold a bid above the PDH (1964.50), price could pullback into prior days range to probe for renewed buy response. Levels to be mindful of are 1954 – 56 PDVTMP, then 1950.00 which is Prior Day Open Range Rotation MidPoint. The 3DCPZ becomes key retracement target zone between 1944.25 – 1945.75.

Trade Strategy: With intra-day volatility on the rise with swings of increased magnitude in either direction, our main trade strategy will be to remain open and flexible to two-side trade, both long/short from key Decision Point Pivots (DPP). 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 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.



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