- The MKT has a firm tone and as long as the integrity of the previous session low remains intact, look for excuses to get long. On the SELL side UP FADE strategies are valid but profit targets and risk management should be tight. REVERSAL strategies should be applied only at the UP and +c after an exhaustive signal. Use DP BREAKOUT strategies as a signal to FADE a positive reaction against the DIR. Only until the MKT breaks the positive structure are sell signals an opportunity.
- On the BUY side BREAKOUT, FADE and REVERSAL are recommended as the MKT is bid and all buy signals are valid opportunity. If stopped out at or near the low tic of a reaction and the MKT is not following through to the downside, look to re-enter using the recent squeeze low as a stop. If the MKT breaks structure, de-leverage and be more selective as the likelihood of a sideways trade is high.
Wrap Up
- In a BULL TREND market state, the market should continue to build positive structure if it is going to indeed follow through on the bull trend signal. After breaking positive structure with a new move low, the bull trend signal is negated and traders should lean on their OPTIMAL HEDGE TACTIC. The sentiment remains positive above the R Level and any corrective sell off is a valid BUY opportunity ABOVE THE R. The RSI indicator warned of the positive reaction to come when it put in a BULLISH DIVERGENCE at our KEY INFLECTION PIVOT. This allowed traders to get long the market from the R Level and capitalize on the positive reaction.
