April 11, 2011
- in Uncategorized by schooloftrade
Golden Lunch strikes again, I was ready to trade crude and gold
Crude Oil Futures:
– We see lower lows after making new highs all week last week
– We have a wedge pattern developing whenever you have a trending day or two and then we come off new highs or new lows
– So we know this is going to be a wedge based on what happened last week
– We also see the bullish trend has NOT come to an end officially yet, so we need to wait and see what the day brings
– The bullish price channel on the 89range chart reminds us to buy pullbacks and sell retracements on the way up
– However, the most recent wedge pattern and being at the highs of the channel tell us that ANYTHING can go
– We can buy the lows of the channel as support
– We can sell the highs of the channel as resistance
Lets plan ahead for the best spots to trade crude oil
– If price rises:
o I’m selling the highs of the wedge around 112.06, 112, 59 overhead, and 113.0 overhead
o I will also consider buying pullbacks above these resistance levels, which will soon become support
– If price falls:
o I’m buying the lows of the wedge at 111.04, 110.0 below us, 109.83 below, and 109.00 the support all the way down.
o If prices keep dropping I will look to sell retracements when we make new lower lows
830am est
– We see the bearish price channel on crude oil shows the price is weak as it drops on the 13raange chart
– Every time we see new lower lows it sits and trades sideways for a while, this tells me the market may be looking for more clues to the future of price today.
– With this bearish price channel we see on the 13range (fast timeframe, where we look for entries and patterns) we can assume the short term selling opportunities will be the higher percentage, however, we need to remember the wedge pattern = anything can go.
– We also see the PHOD and PLOD are above us
– First it tells us this is an OUTSIDE trading day
– The
– Its telling us the SELLERS are in control, and will be in control until we see higher high and higher lows in the market again
– If the sellers were NOT in control we would be ABOVE the PLOD
930am est
– We’ve had a difficult time telling who is in control of the price on crude oil
– Lets review what we’ve seen thus far?
o Saw great speed as the PLOD was tested
o We saw lots of big money buyers
– The way the buyers made it FEEL at the highs makes us think the buyers are going to keep trying to get above the PLOD, and if they can, we need to consider the short term trend is changing
– But we also have to take a moment and recal the big picture
– Sell the highs of the wedge
– Sell the highs of the channel
– Sell the PLOD if we are below it
– The big picture and the fundamentals that we trade with need to be our focus.
– We must also use momentum as our filter for which direction we can trade in
– 13range on crude oil shows oversold momentum, this tells me to buy here, not sell
– So we have the BIG PICTURE says sell these highs
– The shorter term momentum says buyer here with oversold momentum
– So we have conflicting signals
– We know the highs of the wedge are most important, so this buying opportunity at the highs will be lower % / higher risk
– I want to see us at the highs of the wedge for the big picture and then at the same time we get overbought momentum
1000am est
– We want to use the dollar, but we need to focus on where the dollar is now, not where it was last night
– Dollar has dropped, but now trading sideways
– This tells me the dollar index may drop to new lows and cause higher highs on the markets we trade most
– This may also hold these support at 75.000 and price may rise back up? This will cause new lows on the markets we trade most.
– DX tells me anything can happen
– Dollar trading in a wedge, this means narrower price moves on the market we trade most
– This wedge should ALSO have a dropping ATR
– Rising Average true range tells us this wedge may NOT be the drastic sluggish day that we are afraid may be coming
1015am est
– We have very slow speed here on the markets we trade most
– The dollar wedge is still holding strong which is causing these markets to slow down and go sloppy
– We need to focus on following our plan
o Never let our emotions trade for us
o Wait for the consistent speed
o And don’t forget we may need to wait for the end of the morning moves ‘golden lunch’
Lets plan our attack on crude oil:
– If prices fall
o Sell this highs of the wedge
o Beware trading around these big round numbers such as 112.00 when the volume is so slow
o Buying 111.54 support
o Buying 111.80 support
o If price makes new lower lows below .80 im selling retracements
o Selling < 111.54 as it becomes resistance when we make new lower lows
– If price rises:
o I will be a seller first as price rises
o I will sell the PLOD first
o Then if we make new highs I will Buy above PLOD @ 112.29
1030am est
– We tried to buy the lows/support of 111.80 on the crude oil
– Momentum rising from oversold
– Increasing speed
– Lots of buyers
– But we quickly saw that it only took a few sellers to push price back down
– That FEEDBACK from the market gives me a clue
– Clue = sell-side will be the Higher % side
1100am est
– We earned $1000usd in the ‘golden lunch’ today from 1130 and later
– We now see the market slowing down again
– We are content with the profit we’ve earned, so lets be sure to look for the highest % opportunities.
Plan your attack for the rest of the day on crude oil
If price drops
– Buying 111.04
– Buying 110.50, low of the wedge
– If price makes new lower lows, breaking support, I will then sell new lows with retracements
– I don’t sell the lows, I sell retracements when we make new lows
