- The MKT is in a sideways digestive position with a slight positive bias.
- On the SELL side avoid DP BREAKOUT strategies but rather FADE a positive reaction against the DIR after a negative breakdown signal. UP and UT1 REVERSAL strategies are recommended over FADE strategies as "sloppy" trading conditions are expected. Any UP FADE trades should get confirmation first.
- On the BUY side UP BREAKOUT strategies are valid but should expect a laborious trade. Work any position, selling into emotional surges and re-entering on any sharp pullbacks. Expect a choppy trade and be aggressive on minimizing profit give-back. DP and DT1 FADE and REVERSAL strategies are recommended.
- The market has produced a positive signal in a NEUTRAL market state and the probability for the day is to the upside. By placing the R Level at the minor level below the DP, the analyst is "expanding" the Critical Range by saying that any reaction can go as far down as the R Level, before it is expected to rally. Our market commentary tells us that a BUY DP and DT1 FADE and REVERSAL strategies are recommended today, and around 9:30 A.M. we are presented an opportunity to execute a BUY R REVERSAL strategy. Since the R Level is at a minor level between the DP and DT1, this strategy is in agreement with out expectation for the day, and also illustrates the importance of the R Level. After selling off throughout the early session, EURO STOXX 50 found support at the R Level, and quickly began to rally. Since the market is in a NEUTRAL DIGESTION state, we must respect the sideways tone of the market, and be aggressive with our position management. Although the DIR would have been an ambitious target to attain, the market stabilized at the minor level between the DP and DIR presenting the trader with a good time to exit the position and realize a solid profit.
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