Technically the MKT is in a BEAR TREND CORRECTION but remains vulnerable to downside with all trading below 8948. Positive corrective action can disappear quickly so avoid leveraging up on any rally as the negative momentum will try to re-establish itself.
Key off the 8838 Inflection Pivot. This is the base keeping the positive corrective trade alive. A failure here is needed to put the currency back on the ropes.
On the SELL side accept FADE, REVERSAL and BREAKOUT strategies. BREAKOUT strategies below 8838 should just "go" with expectations that the negative momentum is going to resume course. These opportunities should be executed as a "one-shot" deal to avoid getting "chopped" up in a digestive trade. A more conservative entry would be to wait for a positive reaction after a negative breakout signal to FADE against 8893. FADE strategies at 8948 and 8999 should wait for confirmation as the MKT is correcting and has the potential to be "stop and go" as it probes higher. Keep profit targets tight. A better strategy is a REVERSAL, as a violation of a major inflection point that cannot be held is a negative turning point signal with the potential to be the resumption of the negative trend. Profit targets on these strategies should be greater.
On the BUY side BREAKOUT strategies above 8948 although aggressive can be profitable as long as the corrective rise maintains structure. Once broken any trading from the long side is questionable and it may be time to roll the other direction. Use basic trend following indicators to aid in position management of these trades. REVERSAL strategies off 8838 or near the previous session or move low will work best with the expectations that the MKT is going to shift into a more neutral digestive state. Keep profit targets and position management tight on these strategies.
Note: The MKT is correcting an aggressive negative trend and more likely to resume that trend than not. This being said the worst case scenario for sellers expecting the trend to resume is a low volatility "one-way" trade higher. Don't be stubborn FADING higher corrective move highs. After 2 or more losing sales take a break and wait for potential opportunity in the later part of the session. JS
* ENTRY STRATEGY - 5min web video explaining FADE, BREAKOUT and REVERSAL strategies http://www.jsservices.com/education/sbt/CME_EntryStrategies5min.wmv .
To learn more about JS Services Strategy Based Trading approach please contact me at info@jsservices.com. You can also visit http://www.jsservices.com/ and sign up for a Complimentary FREE Trial.
