GOLD - BEAR TREND CORRECTION

This Weeks Market: GOLD Aug’13 contract


Market State: BEAR TREND CORRECTION

GOLD has been in a BEAR TREND since the start of the year confirming a negative shift the week of FEB 11 2013 and is now in a “CORRECTIVE” rally from the JUN 24 2013 week lows.

Defined:

A market in a BEAR TREND CORRECTION has produced a positive signal against a negative trend. The market is vulnerable to the downside, however does have the potential to produce a counter trend corrective rise. The market is searching for resistance. Positive corrective action can disappear quickly so avoid leveraging up on any rally as the negative momentum will try to re-establish itself.

The key to this Market State is the technical level that identifies the “peak” of the lower move low, lower move high Structure of the underlying BEAR TREND. It is this Market Structure alignment point that will signal a resumption of the BEAR TREND or a transition into a neutral or positive trending Market State.

The Market Structure alignment for Aug’13 GOLD has been identified at 1345.0.




STRATEGY AND TACTICS

A BEAR TREND CORRECTION is a NON TREND type state. In NON TREND type states follow through is unlikely however emotional trading conditions should be expected at the technical alignment points. Use Deviation, oscillator and turning point indicators and reversal chart patterns to aid in identifying an exhaustive turn and resumption of the BEAR TREND. TREND FOLLOWING tactics such as a simple Moving Average can be incorporated to confirm a break in the current positive momentum. In a BEAR TREND CORRECTION Market State the expectation is that the positive “corrective” rally will break structure at an alignment point however until it does, the potential for a positive transition must be respected.

Market State analysis identifies the technical environment the market is currently trading in. Strategies and tactics to buy or sell should be in alignment with this theme to optimize performance. The best risk defined opportunities are to be found at Market Structure alignment price levels.

ADDITIONAL COMMENTS


Identifying the negative “turning point” is the optimal strategy in this market state, as it represents the potential beginning of a new reaction lower. Corrective states can be emotional before the positive “corrective” action exhausts and the BEAR TREND resumes. This state does have the potential to spark a “sustained” corrective rise lasting 3-5 sessions and transition the market in a neutral state or even BULL TREND reversal.

The market is Trending in one direction but is characterized by a “stop and go” trade, with sharp counter trend reactions. There is opportunity on both sides of the market with the best being in the direction of the underlying Trend bias. FADE and REVERSAL strategies are expected to be more successful over BREAKOUT strategies as the CORRECTIVE action will keep the trade “choppy”...

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SWISS FRANC

Today's MARKET STATE SWISS FRANC **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 SF

Wrap Up

The DOUBLE TOP in the SWISS FRANC today at our KEY INFLECTION PIVOT was the signal to get SHORT the SWISS FRANC market on the SELL UP REVERSAL strategy.  At 3:30 am CT, the market peaked its head above the UP R and then quickly reversed back under this key level of resistance.  After selling off back toward the DIR, the market had another go at the UP R and offered us an exhaustive DOUBLE TOP formation.  This was our "tell" to accept the SELL UP REVERSAL strategy which took the market all the way down to the DP SUPPORT pivot, where profits could have been realized.  After bottoming at the DP, a BUY DP REVERSAL hedge strategy got traders LONG from our SUPPORT pivot.  Traders were able to ride this trade all the way up to the DIR to close the session.

WHEAT

Today's MARKET STATE WHEAT **BEAR TREND CORRECTION**
- Technically the MKT momentum is counter trend and will need a strong showing to overcome the underlying negative threat.
- On the SELL side REVERSAL strategies off the UP or near the previous session or move high will work best. DIR or DP BREAKOUT should just go. A better option is to FADE positive reactions against the DIR after a negative signal.
- On the BUY side accept FADE and BREAKOUT strategies. BREAKOUT should expect some "starts and stops" The trade is corrective and sharp positive surges can be erased in a hurry.  FADE will work if the corrective state is going to continue.  REVERSAL strategies are a lower probability as a break in structure should be considered a potential negative shift in momentum.

Today's PRICE MAP Performance for W

Wrap Up

In a NON-TREND market state, the RSI momentum indicator gave traders the "tell" to accept the BUY R FADE strategy from our key inflection pivot.  As the market bottomed at the DP R level of SUPPORT, the RSI indicator signaled a major BULLISH DIVERGENCE.  This TACTIC gave traders the confident to get long the market from the lows of the session and ride the rally up to the DIR where profits could have been taken.  Today's action in the WHEAT futures market is another example of how MARKET TACTICS can aid in confirming optimal strategy given the technical state of the market.

NATURAL GAS

Today's MARKET STATE NATURAL GAS **BULL TREND CORRECTION**
- The MKT has produced a negative signal against an underlying positive trend. On the SELL side accept UP FADE signals on the 1st press into the area only. REVERSAL strategies should only be done off the UP or the previous session high point and will immediately work if they are going to. Keep position and risk management tight on these trades. SELL DIR and DP BREAKOUT strategies are aggressive but do have potential to be the start of a larger corrective turn. Keep risk management tight.
- On the BUY side accept REVERSAL signals off all major inflection levels, expecting the underlying positive momentum to resume. DP FADE strategies will work better with confirmation as the MKT is in a corrective state and will be probing lower, looking for soft spots. Work any BUY DIR and UP BREAKOUT strategies as any positive shift in momentum has the potential to be the start of the next leg higher. DIR FADE strategies after the UP Breakout should use greater leverage.

Today's PRICE MAP Performance for NG

Wrap Up

Today was a good day to execute our optimal STRATEGY from our KEY INFLECTION PIVOT in the NATURAL GAS futures market.  In a BULL TREND CORRECTION state, the market has produced a corrective signal in an underlying BULL TREND.  The expectation is that any corrective pullback should exhaust at the DP R.  By using our RSI tactic, JS Traders were able to spot the BULLISH DIVERGENCE signals forming with each successive low approaching the DP R inflection pivot.  Our final divergence signal just before noon CT gave traders the BUY DP REVERSAL signal.  Traders were able to ride the divergence signal all the way up to the DIR.

BRITISH POUND

Today's MARKET STATE SOYBEANS **NEUTRAL POSITIVE TRANSITION**


- 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 BP

Wrap Up

A perfect day to short the BRITISH POUND from our "resistance zone" as the market traded to within a few ticks of the KEY INFLECTION PIVOT for the session before the sharp sell off.  Around 6:30 am CT the market gave traders the first entry signal with a SELL R FADE strategy from the optimal entry point at the 1.5138 R LEVEL.  For traders that missed this signal, another SELL opportunity was presented just after 8 am CT with a SELL UP REVERSAL after the market REVERSED back into the Critical Range.  After retesting the UP for one final time at 9 am CT, the market collapsed down through the DIR and eventually closed at the lower end of the Critical Range between the 1.5044 minor level and the Downside Pivot (DP).  By identifying the RESISTANCE ZONE from the UP-R, JS Traders were able to short the BP from the highs of the session and capitalize on the big sell off.

JS Services Strategy Based Trading

Defining Market State, Structure, and Strategy is essential to becoming a successful trader. See how JS Services can help you reach your maximum potential!

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

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Good Trading!

SOYBEANS

Today's MARKET STATE SOYBEANS **NEUTRAL POSITIVE TRANSITION**


- Technically the MKT has the potential for a positive turn. Opportunity exists on both sides, however there is a better chance of an acceleration to the upside if the integrity of the previous session low remains intact. On the SELL side avoid UP and DIR FADE strategies until after the previous session low point has been broken. Until then, a better opportunity will be a UP REVERSAL strategy. The idea is that the transition trade is over and a negative shift back into a NEUTRAL DIGESTION is expected. DP BREAKOUT strategies can be profitable but they are aggressive. Risk less, go for more.
- On the BUY side accept BREAKOUT, FADE and REVERSAL strategies with the expectation that the current positive transition will continue. Keep aggressive position management on UP BREAKOUT strategies as the MKT is still in the neutral zone and has yet to commit to a new trend. A more conservative strategy would be to wait for negative reactions after a positive signal to FADE the DIR.


Today's PRICE MAP Performance for S

Wrap Up

Today the STRONG BAR breakout pattern was the "tell" to accept the UP BREAKOUT strategy in the SOYBEANS market.  The MKT was in a NEUTRAL POSITIVE TRANSITION market state with the sentiment bias below the market.  The press into the UP was the "tell" for whether or not the market was going to follow through on the transitional signal.  The STRONG BAR BREAKOUT above the UP was a solid psychological signal that confirmed the LONG opportunity from the UP.  The expectation was for a pop up to the UT2 and the explosive move today allowed traders to stay in the trade all the way up to the UT3 resistance level.  By realizing the positive momentum had staying power after holding above the UP on the retest, traders were able to get long the market on either the initial BREAKOUT from the UP or the retest of the UP.  The market maintained positive structure throughout the entirety of the trade and allowed traders to profit on the explosive upside move, that eventually corrected and closed the session just about flat on the day.