- Technically the MKT has produced a positive signal against
a negative trend. On the SELL side accept BREAKOUT, FADE and REVERSAL
strategies off major inflection points with the expectation that the negative
momentum is going to resume. UP REVERSAL strategies are recommended over a
FADE, which should have at least 1 if not 2 challenges to its integrity before
executing a short sale against it. A better approach to a straight DP BREAKOUT
strategy is to FADE a positive "squeeze" reaction after a negative
breakdown signal against the DIR.
- On the BUY side avoid DIR and DP FADE strategies until
after the previous session high point or major resistance has been taken out to
confirm a break in momentum. Until then, a better opportunity will be a DP REVERSAL
strategy. UP BUY BREAKOUT strategies can be profitable but they are aggressive
and should look to take profits and potentially REVERSE short at resistance
targets.
-With an MC Value of +1 and the R Level at the DIR, the CANADIAN DOLLAR has generated a positive signal which remains intact above the R Level. The Market surged a little after 5 A.M., moving through the UP offering the trader a "Buy UP Breakout" trade. Although this is an aggressive strategy, it was in line with our expectations and in agreement with the Sentiment Bias. Price action continued through the UT1 and eventually made it up to the UT2, where profits must be realized. From here, our Market State suggests that profits should be taken, and potentially REVERSE short at resistance targets. Had the trader followed the expectations for this Market State, he or she could have REVERSED short, and made a profit, as the market fell off back to the UT1 around 10 A.M.
