CRUDE OIL - PIVOTAL

This weeks MKT is: CRUDE OIL OCT'13 contract.

Market State: TREND NON TREND - PIVOTAL 

The Long Term forecast for CRUDE OIL remains $125 over the next 3 months. Currently the MKT has yet to commit and is would up in a PIVOTAL market state.

MARKET STATE 

The market in a TREND NON TREND has typically been in a NEUTRAL market state for at least 3 trading periods and is ready to make a decisive move out of its “range” trade. This is a “pivotal” trading period with the potential to be the start of the next significant advance or decline. This Technical State can present difficult trading conditions with false signals in both directions common. The MKT is gearing up for a move and will either continue to narrow its recent trading range or “bust” out into a new trend. Opportunity exists on both sides of the market, however aggressive risk management should be implemented. REVERSAL and BREAKOUT strategies are recommended. Successful BREAKOUT strategies under these conditions are typically “one-shot” opportunities, using aggressive trail stops.

UP = 107.10 
DIR R = 106.12 
DP = 105.14 

Additional Comments NOTE: The MKT in this Technical State is “on the fence” with the potential for a decisive session. Typically a successful “trend” move will have only 1 test of the DIR R level before making a move. If the MKT presents an opportunity early in the trading period that does not follow through, consider taking a step back to re-initiate later in the session to avoid the mid-session chop.

CRUDE OIL - POSITIVE TRANSITION

This weeks market is: CRUDE OIL OCT'13 contract

Market State: NEUTRAL POSITIVE TRANSITION

The Long Term forecast for the front month Crude Oil is $125 over the next 3 months. Currently the the MKT has yet to commit and is in a NEUTRAL POSITIVE TRANSITION market state with a higher expectation.

MARKET STATE

A NEUTRAL POSITIVE TRANSITION #NPT technical state  has produced a positive technical signal from a Neutral position. Expectations are for this signal to follow through with the potential of being the beginning of a new BULL TREND move. The #NPT market state can present difficult trading conditions with false signals in both directions common. If the market is indeed going to transition high it should just “go” and maintain positive structure. If not, price action is more likely to shift into more of a sideways trade. REVERSAL and BREAKOUT strategies are recommended. Successful BREAKOUT strategies under these conditions are typically “one-shot” opportunities, using aggressive trail stops.

MARKET STRUCTURE

UP = 108.82

DIR = 106.92 [YELLOW DASH LINE]

DP R = 105.03

The the positive signal is in “play” above the DP R Level. Expectations are for the MKT to create positive trend structure above this price point. Currently MKT is trading @ the 106.92 DIRECTIONAL PIVOT (the YELLOW dash line in the image above). Use this technical level as a momentum trigger for the current price action. A BREAKOUT above the UP [UPSIDE PIVOT] is needed to confirm any shift into a BULL TREND market state. Markets in this state should just “go” and begin to trend higher. If not a sideways digestive trade is expected to develop. Only below the DP is the positive signal negated.

GOLD - NEUTRAL DIGESTION

This weeks market remains: GOLD Aug'13 contract

Market State: NEUTRAL DIGESTION

The longer term Market State remains BEAR TREND CORRECTION but the contract has shifted into a NEUTRAL DIGESTION market state with a sideways expectation.

A NEUTRAL DIGESTION technical state is typified by directionless sideways trading action. False BREAKOUT signals are common in this technical state. Expectations are for price move with no follow through and “misleading” intra-day structure formation

NEUTRAL DIGESTIVE sessions can be the precursor to a “BREAKOUT” as the coiling action will build power. Typically a sign that the sentiment is going to change from neutral digestive to trend is signaled by an early session trend move with no break in the positive or negative structure. A simple Moving Average is a great tool to use to identify a possible “Breakout” day with the expectation that if the market is going to scale up or down it will maintain a trade above or below the Moving Average.
The underlying long term negative bias has sentiment above the market, defined by the R LEVEL.

R = 1348.7

UP = 1336

DP = 1308.3

EXPECTATION is for any positive price action to be contained within or below the UP-R resistance and any negative momentum to find support above the DP [DOWNSIDE PIVOT]. The underlying sentiment bias is negative so the DP should support any weakness if the sideways forecast is going to hold. A failure from the DP support is a sign of weakness that is leveraged by the negative sentiment bias which must be respected as the potential start of a transitional trade and the potential resumption of the underlying long term BEAR TREND.

GOLD - BEAR TREND CORRECTION

UPDATE : Aug'13 GOLD

1327 is the pivot supporting the corrective rise. If the MKT is going to remain "CORRECTIVE" targeting the 1345 resistance it will maintain a trade above this price point. If not it is vulnerable to a resumption of the BEAR TREND.

GOLD - BEAR TREND CORRECTION

This Weeks Market: GOLD Aug’13 contract


Market State: BEAR TREND CORRECTION

GOLD has been in a BEAR TREND since the start of the year confirming a negative shift the week of FEB 11 2013 and is now in a “CORRECTIVE” rally from the JUN 24 2013 week lows.

Defined:

A market in a BEAR TREND CORRECTION has produced a positive signal against a negative trend. The market is vulnerable to the downside, however does have the potential to produce a counter trend corrective rise. The market is searching for resistance. Positive corrective action can disappear quickly so avoid leveraging up on any rally as the negative momentum will try to re-establish itself.

The key to this Market State is the technical level that identifies the “peak” of the lower move low, lower move high Structure of the underlying BEAR TREND. It is this Market Structure alignment point that will signal a resumption of the BEAR TREND or a transition into a neutral or positive trending Market State.

The Market Structure alignment for Aug’13 GOLD has been identified at 1345.0.




STRATEGY AND TACTICS

A BEAR TREND CORRECTION is a NON TREND type state. In NON TREND type states follow through is unlikely however emotional trading conditions should be expected at the technical alignment points. Use Deviation, oscillator and turning point indicators and reversal chart patterns to aid in identifying an exhaustive turn and resumption of the BEAR TREND. TREND FOLLOWING tactics such as a simple Moving Average can be incorporated to confirm a break in the current positive momentum. In a BEAR TREND CORRECTION Market State the expectation is that the positive “corrective” rally will break structure at an alignment point however until it does, the potential for a positive transition must be respected.

Market State analysis identifies the technical environment the market is currently trading in. Strategies and tactics to buy or sell should be in alignment with this theme to optimize performance. The best risk defined opportunities are to be found at Market Structure alignment price levels.

ADDITIONAL COMMENTS


Identifying the negative “turning point” is the optimal strategy in this market state, as it represents the potential beginning of a new reaction lower. Corrective states can be emotional before the positive “corrective” action exhausts and the BEAR TREND resumes. This state does have the potential to spark a “sustained” corrective rise lasting 3-5 sessions and transition the market in a neutral state or even BULL TREND reversal.

The market is Trending in one direction but is characterized by a “stop and go” trade, with sharp counter trend reactions. There is opportunity on both sides of the market with the best being in the direction of the underlying Trend bias. FADE and REVERSAL strategies are expected to be more successful over BREAKOUT strategies as the CORRECTIVE action will keep the trade “choppy”...

For Market State education, analytics and application please contact info@jsservices.com .

SWISS FRANC

Today's MARKET STATE SWISS FRANC **BEAR TREND**
- Technically the MKT is vulnerable to the offer. On the SELL side accept all BREAKOUT, FADE and REVERSAL signals. The MKT is on edge and any negative signal, especially below the previous session high, is an opportunity. Anticipate a price "zone" around a major resistance point to FADE. Have a plan and be ready. If your stop gets hit and the MKT does not immediately follow through, consider re-entering, even doubling up if there is structure to define low risk.
- On the BUY side REVERSAL strategies can be executed off of major support levels but preferably after an emotional sell off. This is an aggressive strategy and any profits should be realized at the previous support failure points. Avoid DP FADE BUYS even with confirmation, as this is more likely a plateau for a BREAKOUT SELL strategy. UP BREAKOUT strategies are not recommended but do have a better chance of succeeding than a DP FADE.

Today's PRICE MAP Performance for SF

Wrap Up

The DOUBLE TOP in the SWISS FRANC today at our KEY INFLECTION PIVOT was the signal to get SHORT the SWISS FRANC market on the SELL UP REVERSAL strategy.  At 3:30 am CT, the market peaked its head above the UP R and then quickly reversed back under this key level of resistance.  After selling off back toward the DIR, the market had another go at the UP R and offered us an exhaustive DOUBLE TOP formation.  This was our "tell" to accept the SELL UP REVERSAL strategy which took the market all the way down to the DP SUPPORT pivot, where profits could have been realized.  After bottoming at the DP, a BUY DP REVERSAL hedge strategy got traders LONG from our SUPPORT pivot.  Traders were able to ride this trade all the way up to the DIR to close the session.

WHEAT

Today's MARKET STATE WHEAT **BEAR TREND CORRECTION**
- Technically the MKT momentum is counter trend and will need a strong showing to overcome the underlying negative threat.
- On the SELL side REVERSAL strategies off the UP or near the previous session or move high will work best. DIR or DP BREAKOUT should just go. A better option is to FADE positive reactions against the DIR after a negative signal.
- On the BUY side accept FADE and BREAKOUT strategies. BREAKOUT should expect some "starts and stops" The trade is corrective and sharp positive surges can be erased in a hurry.  FADE will work if the corrective state is going to continue.  REVERSAL strategies are a lower probability as a break in structure should be considered a potential negative shift in momentum.

Today's PRICE MAP Performance for W

Wrap Up

In a NON-TREND market state, the RSI momentum indicator gave traders the "tell" to accept the BUY R FADE strategy from our key inflection pivot.  As the market bottomed at the DP R level of SUPPORT, the RSI indicator signaled a major BULLISH DIVERGENCE.  This TACTIC gave traders the confident to get long the market from the lows of the session and ride the rally up to the DIR where profits could have been taken.  Today's action in the WHEAT futures market is another example of how MARKET TACTICS can aid in confirming optimal strategy given the technical state of the market.