NOV 4 2009 REVIEW
On Nov 4th 2009 the Swiss Franc Dec'09 futures contract was in a BEAR TREND ACCELERATION technical state.
The Inflection Pivot that defined that technical state was defined as 9767.
Expectations are that if the negative signal is going to follow through the MKT will remain below the price point. A rise above this price and sentiment shifts.
A BEAR TREND ACCELERATION technical state is an excited state. The MKT is fearful, almost in a panic. Any positive turn out of that state will be a big “relief” and buyers will scramble to “rebalance” sometime sparking a sharp advance.
This is what played on in the SWISS FRANC Z’09 yesterday. The MKT could not follow through on its technical signal and after a breach in the negative structure a sharp rally was produced.
The Inflection Pivot defines structure to the current technical state. In BEAR TREND ACCELERATION it is the turning point from “aggressive sell” to “buy”. The market produced a negative signal. The signal was false and a counter positive reaction from the false negative signal should be expected.
This is the power of strategy based trading, aligning your expectations with the MKTs current technical state. Your expectation in a BEAR TREND ACCELERATION technical state is that the MKT is going to “fall out of bed”. If this does not play out and the signal is “invalid” a counter positive reaction should be expected. The price point that defines this sentiment shift is what I call the Inflection Pivot. Hope this helps.
Good trading.
JS
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SWISS FRANC Z'09 Price Map Chart Overlay Nov 4, 2009 performance
STRATEGY BASED TRADING Review http://progressive.powerstream.net/008/00102/edu/interactive/js_services/strategy_based_trading/index.html
