The trickiest period to trade a particular market for me is when it is going through distribution. Distribution is when a market is topping, or bottoming, and is marked by frequent and wide price swings -- think up big one day, and down big the next. The EURJPY chart below is, I believe, an example of distributive price action as market professionals exit long-term positions one day, forcing the market lower, and shorter-term, more speculative traders entering new positions the next, running prices back up.

Distributive trade is by nature counter-trend, or sideways trade, and when you drop down to the shorter-term charts marked by spiky candles with small bodies which reflect market indecision.

If you think about it, this type of trade is actually tailor-made for slowing holiday trade, and while not the best environment to operate in, not such a bad arena to trade in if you recognize the signs.

Chart courtesy of eSignal

John Jay Norris

Senior Market Strategist

Brewer Futures Group, LLC

200 South Michigan Ave., 21st Floor

Chicago, IL 60604

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