CRUDE OIL - BULL TREND

OCT'13 CRUDE OIL

Market State - BULL TREND

Technically the MKT remains in a positive position above the 106.73 DP [DOWNSIDE PIVOT]. Expectation is for the MKT to maintain positive momentum and trend higher. Use trend following tactics and the Price Map to identify opportunity to participate in any new leg higher.107.83 is the KEY DIRECTIONAL PIVOT for the session.

BULL TREND - OPTIMAL STRATEGY

CRUDE OIL - MAKING A MOVE

The OCT'13 CRUDE OIL has broken out to the upside basis the DAILY market state and is approaching good directional resistance at the 109.32-109.06 Upside Target resistance. If the MKT is going to fall back into a sideways digestion it will reject here. If not the LONG TERM POSITIVE TRANSITION is in play targeting $125. Keep a BUY BREAK outlook above the 107.10 Upside Pivot [UP].

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”...

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