EURO CURRENCY

Today's MARKET STATE for EURO CURRENCY: **NEUTRAL DIGESTION **

- The MKT has a slight negative bias in a difficult "choppy" trade. On the SELL side DP BREAKOUT strategies are valid but should expect a laborious trade.  UP and UT1 FADE and REVERSAL strategies are recommended but profit should be taken at initial targets. The probability is to the downside today but is not a day to press it.
- On the BUY side avoid UP BREAKOUT strategies but rather FADE a negative reaction after a positive breakout signal at the DIR. DP REVERSAL strategies are recommended over FADE strategies as "sloppy" trading conditions are expected. Any DP FADE trades should get confirmation before executing. Position management adjustments should be anticipated for all longs as sideways trading conditions can quickly erase profits.

Today's PRICE MAP Performance for EU

Wrap Up
-The EURO CURRENCY performed to expectations today.  There was an early test of the DIR which presented the opportunity for a "Sell DIR Fade" strategy below the R level.  The market came down to the DP, held support for a short period of time, and then broke below the DP, presenting a "Sell DP Breakout" opportunity.  The break below the DP was significant because it signaled a breakout from the "Critical Range" and implied that price was transitioning lower, which indeed was confirmed when the price made new lows below the DT1.

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http://progressive.powerstream.net/008/00102/edu/interactive/js_services/strategy_based_trading/index.html

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GBPUSD

Today's MARKET STATE for GBPUSD: **NEUTRAL POSITIVE SHIFT**

-The market has produced a positive signal against underlying negative momentum. The sentiment bias R Level at the upper Critical Range extreme UP [UPSIDE PIVOT] is an indication that the positive signal is suspect and is expected to “exhaust” at the UP R Level. This price inflection point represents a “hard” lid to the corrective signal. If the market is indeed going to revert to a soft sideways trade it will reject here. A BREAKOUT however will confirm the positive signal and is expected to provide a “pop” into a higher trade the UT1 [UPSIDE TARGET #!] the minimum target. Don’t fight positive structure above the R Level as it does have the potential to be the start of a transitional trade north. SELL FADE opportunities against the UP R are a better opportunity than a REVERSAL as this level is expected to maintain its integrity if the trade is going to sour. Initiate sales sooner than later on any negative momentum shift as the NEUTRAL nature of the trade state will limit any extended TREND move.

Today's PRICE MAP Performance for GBPUSD

 

Wrap Up

 -Today's move was presented to us early in the session. There was a small pop around 3 A.M. which failed from the DIR setting up a "Sell DIR Fade" strategy. The price fell off sharply, rebounding off of the DP, and eventually breaching the DP around 5 A.M. From here we saw a reaction back to the DP, and the rest of the day took on a gradual advance back toward the DIR.

EURUSD

Today's MARKET STATE for EURUSD: **BEAR TREND**

- Technically the MKT is vulnerable to the offer. On the SELL side accept all BREAKOUT, FADE and REVERSAL signals. The MKT is on edge and any negative signal, especially below the previous session high, is an opportunity. Anticipate a price "zone" around a major resistance point to FADE. Have a plan and be ready. If your stop gets hit and the MKT does not immediately follow through, consider re-entering, even doubling up if there is structure to define low risk.
- On the BUY side REVERSAL strategies can be executed off of major support levels but preferably after an emotional sell off. This is an aggressive strategy and any profits should be realized at the previous support failure points. Avoid DP FADE BUYS even with confirmation, as this is more likely a plateau for a BREAKOUT SELL strategy. UP BREAKOUT strategies are not recommended but do have a better chance of succeeding than a DP FADE.

Today's PRICE MAP Performance for EURUSD

Wrap Up
-Today we had an emotional sell off from the DIR. A "Sell DIR Breakout" strategy would have worked well as the sell off took the market all the way down to the DP with very little hesitation. Following the emotional sell off, price rallied back above the DP, creating a "Buy DP Reversal" opportunity, which continued through the DIR.

Today's Performance GBPUSD *NEUTRAL DIGESTION*

SP500 U'12

TECHNICAL STATE: #NEUT - NEUTRAL DIGESTION TRANSITION

The market in a NEUTRAL DIGESTION TRANSITION has typically been in a NEUTRAL market state for at least 3 trading periods and is ready to make a decisive move out of it’s “range” trade. This is a “pivotal” trading period with the potential to be the start of the next significant advance or decline. This Technical State can present difficult trading conditions with false signals in both directions common. The MKT is gearing up for a move and will either continue to narrow its recent trading range or “bust” out into a new trend. Opportunity exists on both sides of the market, however aggressive risk management should be implemented. REVERSAL and BREAKOUT strategies are recommended over fading momentum. Successful BREAKOUT strategies under these conditions are typically “one-shot” opportunities, using aggressive trail stops.

If the market is going to “go” it should continue to hold structure. If not a REVERSAL back into a messy sideways trade should be expected.

SP500 U'12 - SET FOR SIDEWAYS

TECHNICAL STATE:  #NEU - NEUTRAL DIGESTION

Technically the MKT is in a NEUTRAL DIGESTIVE position with all indicators counter balanced. The MKT is "on the fence" with the potential to go either direction or nowhere. Pick your points and have no expectations. In this market state directional moves are not expected to be sustained. Opportunity exists on both sides of the market, albeit profit potential is limited and should be realized “sooner than later”. Markets that do end a session with a strong directional bias will have trouble sustaining that bias in the coming session, without the support of a like shift in the next session’s MC Value.

SENTIMENT BIAS: NEGATIVE – R=UT1

 The R LEVEL equal to the UT1 [UPSIDE TARGET #1] creates a resistance band with the UP [UPSIDE PIVOT] as upper extreme of this technical state. All trading below this price band will have a negative sentiment bias. Typically in this behavioral framework the market is probing higher with this zone acting as the exhaustive high point of the sideways pattern. Use caution.  Difficult trading conditions are expected. A rise above the R Level is a positive signal with the potential to produce a transition higher.

Optimal Strategy = BUY DP REVERSAL; SELL R FADE; SELL UP REVERSAL

Hedge Strategy = BUY R BREAKOUT: SELL DIR CR BREAKOUT

OPTIONS ANALYSIS 

Neutral Digestion markets offer an opportunity to cautiously sell some option premium.  Caution is warranted as the Neutral Digestion state can be a precursor to a breakout as the coiling action will build power.  There is a negative sentiment bias but directional moves are not expected to be sustained.  A breakout to the downside will bring higher volatiles.