MKTstate: Jun 10, 2010

Thursday, June 10, 2010

BUND Futures -CORRECTIVE

Technically the MKT is in a NEUTRAL CORRECTIVE state producing a negative signal against a positive trend. Opportunity exists on both sides of the MKT however a held trade above the 12812 Inflection Pivot will keep the underlying tone positive. Only below this support does sentiment turn sour.

On the SELL side avoid FADE strategies until after the previous session low point or major support level has been broken to confirm a negative shift in momentum. Until then a better opportunity will be a REVERSAL strategy but only off the 1st major resistance level at 12880. This is a one shot trade using a low risk big profit target criteria. The idea is that if the MKT is going to follow through on its negative signal any stength is just a "head fake " before it follows through. SELL BREAKOUT strategies below 12812 can be profitable but they are aggressive and should look to take profits and potentially REVERSE long at support targets. The trade is corrective and the underlying positive tone must be respected.

On the BUY side accept BREAKOUT, FADE and REVERSAL strategies off major inflection points with the expectation that the positive momentum is going to resume. REVERSAL strategies are recommended over a FADE strategies, which should have at least 1 if not 2 challenges to the support integrity before executing a long off 12812. BREAKOUT strategies above 12880 can risk a little more if current events and other MKTs of confluence confirm a positive posture with the expectation that the Bull Trend is going to resume. If not a better approach would be to FADE a negative "squeeze" reaction after a positve breakout signal at 12846 as the neutral technical position can keep the trend sideways.

Note: The MKT is in a corrective position with the potential to move in either direction. Keep your opinions to themselves and focus on what the MKT is telling you it wants to do. Don't fight it, roll with it.

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EURUSD - POSITIVE TRANSITION

Technically the MKT is in NEUTRAL TRANSITION and has produced a positive signal which should infleunce the MKT today if the signal is valid. If the integrity of the prior session's high remains intact it is less liekly to do so with the MKT returning to a sideways trade. Roll with any new strength and leverage up if good risk parameters present themselves. The potential to get in at the beginning of a new move higher is real.

The 12086 Inflection Pivot is the hurdle the MKT must hold above to confirm a sentiment shift.

On the SELL side REVERSAL strategies can be executed off of major resistance levels at or near the previous session high point. Avoid this strategy on higher levels as any new strength has the potential to be the beginning of a move. If the integrity of the previous session high remains intact FADE strategies can be accepted at or near this inflection point on the initial test with tight profit target objectives. If the MKT has already had a reaction off this resistance area avoid this strategy. Use a BREAKOUT strategy as a signal to FADE a positive pull-back after a confirm break in the momentum. Only take this trade if the previous session high point remains intact. Otherwise this will be a BUY REVERSAL opportunity.

On the BUY side be more aggressive after the previous session high has been taken out. Not that this is a pre-condition but should be noted as a confirmation of strength. BREAKOUT strategies should just "go" so keep risk parameters tight. FADE into any negative reaction off an unsuccessful upside BREAKOUT after a support level is confirmed. Use a REVERSAL strategy to leverage up after the MKT gets back above the original breakout point. If the integrity of the previous session high remains intact, avoid REVERSAL strategies as any break momentum is a negative signal that the MKT is going to return to its neutral posture. FADE strategies are recommended early in the session or near the end. The positive signal will either play out from the get go or will make its move in the latter stages of the trading session.

Note: This is a dangerous emotional trading environment. MKT reactions to go a little further that you expect in either direction so anticipate this in your position and risk management.