with my primary 60 minute scenario resistance level taken out today, that puts the alternative scenario in play, which should have us turning down soon. if that resistance zone (marked by the yellow horizontal lines) is exceeded, i have added the last two key resistance lines (in white), which if taken out will most likely mean that the market will break out to new highs. i continue to favor scaling short on any additional move to the top of that yellow resistance zone but will likely begin stopping out over that level. if my primary scenario does play out and we turn down soon, depending on the market action i will most likely remove my long hedges and add more shorts. the key here might be how much more powder is left in the central banks’ kegs to continue to buoy the euro and foil the bearish technical patterns (and bullish $USD patterns).
although i believe that the next 10% move in the market is down before up, i would urge caution with both longs and shorts right now because this market could easily break either way. my preference continues to be to hedged by selecting the best looking patterns on both the long and short side, although i am more heavily skewed to the short side at this time. for those unsure what to do, consider going to cash or at least be very selective on the trades that you take, reduce your position size, and don’t get complacent with your stops.