May 19, 2011
- in Uncategorized by schooloftrade
Three Clues from Crude Oil Futures before 1030 Inventories
We notice a triple threat today:
People waiting for 1030am crude oil news
People waiting for 2pm Meeting Minutes
Crude Oil rollover is today/tomorrow
800am EST
This is off our morning prep from this morning
The Dollar inside the lows of a price wedge
Gold is also in a very narrow price wedge
Crude Oil is sharing volume for contract rollover and also in a narrow wedge
This all tells us we need to be patient and wait for the best times to trade, which will likely be when the dollar moves OUTSIDE of this wedge, and the Crude and Gold find larger wide open spaces.
845am EST
We look at the dollar index a little closer this morning and we see a flat sideways wedge which tells me that there is no day trading bias for one side or the other.
Sideways dollar = buy or sell on the markets we trade most.
Narrow wedge on the dollar tells us this morning may be slow
My goal is to focus on taking trades when the DOLLAR is at its extremes (highs or lows)
Example: don’t trade the crude oil when the dollar is in the middle of its wedge. Look for your crude trades when the dollar is at the highs or the lows of the wedge.
900am est
We begin to review crude oil futures
We do not have to rollover crude oil contracts today because the volume is not higher on the 07-11 contract.
When the 06-11 is lower total volume than the 07-11 we can roll this market forward
We have crude oil news @ 1030am today and we know that there are three phase to the day when trading crude oil
We will be waiting from 10am through 1035am looking to avoid the sloppiest time of the day
Look for the best trades before 1015am, and then after 1040am EST
It will be important that we don’t jump into the market too soon AFTER the 1030 news.
We have a price wedge
We have a long term bear channel, we are above the highs, and a short term bull channel and we are at the lows
We see the PHOD and PLOD are below us, making this an OUTSIDE day
The BMT and the OPEN are below us, so this is a BULLISH sign in the market, but it also gives us an easy plan of attack:
Lets plan our attack on crude oil:
– We are inside a bullish price channel, and we are now above the highs of the wedge.
– We want to see if the price keeps rising we want to buy pullbacks
– If the price reverses we want to trade short into the PHOD and the PLOD is our final target. We expect the range from Tuesday (below us) to act like a price magnet.
– Question is….who is in control? If the buyers are we are buying pullbacks….if the sellers are…we are selling retracements.
o If price rises:
§ Im selling resistance first and then buying pullbacks with new higher highs.
§ When I have resistance I sell, and when that resistance becomes support I am buying.
§ Im selling the HOD 99.88, selling the highs of the channel, and the major highs of 99.65 at the top of the range
§ As price makes new highs im not buying the highs im buying pullbacks.
o If price falls:
§ Im buying at support first, then selling new lows with retracements
§ Im buying support at the lows of the channel 98.44
§ Buying support at the 34r trigger lines 99.40
§ Buying support at the PHOD, but beware the OPEN is right below the PHOD so this will be sloppy, higher risk
§ I will buy support 97.73 top of the major price wedge
§ Buy the LOD 97.62 as support and then selling retracements if make new lower lows
§ Avoid trading around the BMT 97.56 and the previous day’s open 97.11 will make a great final target, but NOT an entry location.
§ If price falls we want to take advantage of the range below us. Look to sell below the previous high of day and take the price down to the previous lows.
935am est
Our alarm goes off and we begin looking for patterns after the US Open
Crude needs to break support at 98.40 and then break the lows of the channel before we can feel confident knowing WHO has control.
If the support holds we’re buying pullbacks on crude, and if does not hold im selling retracements.
945am est
The dollar index has gone flat and sideways on the 13range chart
We see crude oil futures are very weak when momentum goes overbought/oversold quickly.
This information confirms the assumptions we had at 800am
Now the market personality is our MAIN FOCUS.
We already have the charts ready to go, all we need is a little personality to make this price move.
1020am est
We’re now sitting on hands ahead of the 1030am crude oil news
We have 3 trades today, new higher highs we bought pullbacks and followed our plan.
Now we wait and see what the news @ 1030am has for us.
In the meantime we focus on preparing for our next high % trade.
Let’s review the Gold Futures:
We have no current short term dollar trend, this means there is no strong directional bias on the Gold.
We can see a sideways wedge, no directional bias, so buy the lows and sell the highs
We are at the highs of the major bearish price channel, so look to sell the highs, but the area at the highs is very high risk, the BMT is at the same level.
We are in the middle of the range on gold, so its in our best interest to wait to test the highs or the lows.
1030am est
We have lower than expected crude oil inventories.
1055am est
We are now in the 3rd phase of the 3 Phases that Crude Oil goes through on Wednesday.
After 1045am now the CL 06-11 is looking to make its final moves of the morning.
We open the 13range chart and we see a narrow channel inside the middle of the bull channel we already found.
This will be another RED FLAG. Trade the highs, the lows, and avoid the middle.
