June 13, 2011
- in Uncategorized by schooloftrade
Price Wedge was the only clue we needed day trading crude oil
800am est
We wake up on a Monday morning to news out of Europe and news about the OPEX this week.
We know the dollar is rising, the euro is falling (medium term) and we will look to capitalize on these this week.
One thing on our mind will be OPEX/Quadruple witching, and we will do a webinar @ 11am today on that topic.
Reminder that we rolled over the Currencies, Dollar, E-mini’s to the 09-11 contract.
We have a few strikes against us today:
– Monday morning
– No news
– After the G8 Summit
– Ahead of OPEX/Quadruple Witching
815am est
We review the dollar index and begin with the swing trader timeframe the 89-Range chart.
This shows me the most important levels of support and resistance, then I will us a faster timeframe (13range) to find the short-term trend which I will use for my day trading strategy today.
The 89range chart tells me the following:
– We’re NOT at the of the major price wedge like we were last week
– We’re in the MIDDLE of the wedge, and this is known to be a transitional area, up or down, while traders find confidence in either direction.
– I have the BMT (Big Money Trigger Line) overhead at 75.744 which will act like a price magnet.
– Sideways range from 75.370 down to 73.800
We assume the dollar will run into some slop and chop in the middle of this price wedge.
We assume the highs of this minor sideways range will act as minor resistance.
If the dollar wants to go sideways it will likely stall and reverse at 75.400 or the BMT at 75.744
We also assume the dollar will try and test the BMT above it. We shall see if it can do it today, might not have enough gas in the tank to get there.
Now that we know the dollar’s most important levels I need to identify the short term trend so I can use this make educated decisions for my intra-day trades.
The 13range chart tells me the following:
– We may have had a bullish trend last week in the short term.
– This morning at 830am the dollar is in a slight downtrend
– We need to see 1 more lower low, new low of day to confirm a downward trending price channel.
– This market may be trading sideways, or it may be trading lower.
– Sideways markets on the dollar are easy to trade, so are trending markets, we need to get a few more clues before we make our opinion.
Our plan of attack using this dollar index information is as follows:
– If the dollar makes new Lower Lows I’m going to be looking to buy pullbacks with new higher highs on the markets I trade.
– The dollar may trade sideways, and if it does I will then look to trade inside the range im in, buying the lows and selling the highs.
– The dollar may rise off this support, and rising dollar will give me selling opportunities on the markets I trade. Look for selling retracements if the dollar index rises.
850am est
We now review the Crude Oil Futures 07-11 (contract rollover later this week)
The 89range chart shows me the following:
– At the lows of the major price wedge
– We can see our swing trade trigger about to fire off LONG at these lows
– Bearish Price Channel, and we are at the lows
– Sideways range from 102.40 down to 97.80, very wide with that big move down from late last week.
– The BMT (Big Money Trigger Line) and the Big Round number of 100.00 are above us, these will be price magnets.
What does the 89range chart tells us?
– Expect price to rise off the lows of the price wedge and the channel
– Look for the 100.00 and the BMT to act like a magnet, drawing price higher.
– Swing trade about to fire off long also gives us confidence to the long side. (short term)
Let’s move to a faster timeframe, the 34range chart will give me more details.
– Inside day, above the PLOD from Friday (not Sunday)
– BMT and Big Round # are above us here as well.
– Short term bearish price channel, which is also creating a short term bearish price wedge.
– Short term sideways range from 99.58 down to 97.81
Now that we have all the ingredients for our trading strategy this morning, lets plan our trades and then simply trade our plan.
Our plan on trading crude oil today:
– Inside day tells us to trade inside the range we are in. buy the lows, sell the highs, avoid the middle, and avoid the Fake-out breakout.
– Short term on dollar is trending down, so looking for new higher highs and then buying pullbacks.
– We are at the lows of the range (long term) so look for rising prices and buying pullbacks.
– If we trade sideways we will buy the lows and sell the highs.
– If we breakout above or below we will buy pullbacks and sell retracements.
What if price rises:
– I’m selling resistance first, then buying pullbacks second with new higher highs
– I will not buy at the highs/at resistance
– Only buy at support
– Avoid the Big round number of 99.00
– Sell the range highs at 99.58
– Avoid the 100.00 and the BMT at 99.99
– Avoid the middle of the 89range price wedge.
– Sell the highs of the range at 101.71
– Avoid 102.00
– Sell the channel highs at 102.30
If price falls:
– Im buying first, then selling retracements second.
– I don’t sell at the lows/at support
– Sell at resistance
– Buy support 98.30
– Avoid the big round number of 98.00
– Buying the range lows and the channel lows at 97.81
– Avoid 97.00 big round number
– Buy support below us at 96.61
– If we break below the Major channel lows at 96.61 we will go back to the drawing board and do this again.
1000am est
– We took our first trade today for a scratch (+5/-5) and got a much clearer picture of the personality on crude oil.
– Now we know to be very selective with our trading decisions until we see better direction.
– Market Personality is hard to define, but you know it when you see it.
– We’re keeping an eye on the time this morning, losing valuable time and this window of opportunity this morning may come as early as 1135am est.
– Do NOT let your emotions trade for you. You will have to be patient and not over-trade.
The dollar continues to make new lower lows, causing us to be more confident in the buy-side of our trades today.
Buying at support, buying pullbacks, buying with reversals off support is our plan when the dollar is dropping.
Crude Oil now trades in a more narrow price wedge on the 13range chart, giving us more clues as for how LONG this sloppy personality will persist.
Our new plan of attack on Crude Oil @ 1000am est:
– Buy the lows and sell the highs of the new narrow price wedge
– Sell highs of 98.94, and buy the lows of 98.32, 98.02 and avoid 98.00
1015am est
We try one more time to sell the channel highs on crude and this time we’re convinced this market is unfit to be traded.
This can quickly change, but im going to wait for better ‘personality’ to take my next position.
We hear the ECB’s Trichet…
(EU) ECB’s Trichet: ECB has its own collateral framework; not assuming that any countries will leave the Eurozone- Reitetates view that EU must avoid action that would trigger a credit event and any restructuring must be voluntary. – ECB does not decise on sovereign debt actions. – Reiterates that the ECB does not support the eurobond concept. **Reminder: On Jun 10th ECB member Liikanen commented that the ECB should rethink its collateral policy and segregate between collateral
1025am est
We have the dollar making new lows and the crude oil looks like it may have the move it needs to make new highs.
Lets plan our attack on crude with rising prices:
– I’m selling the highs of the range first at 99.00 but remember this is very sloppy around the big round numbers
– I will buy a pullback with new higher highs above 99.00, staying away from entry tool close to the big round number, and trying to get in as early as I can without getting to close to the 89r trigger line which is overhead at 99.35
– Avoid the 100.00 and the BMT at 99.96
– Sell the trend line resistance (blue) just below the big round number.
1040am est
The Dollar Index keeps making new lower lows, the euro keeps climbing off their lows.
We need the Crude and Gold to grow some legs and personality, nothing right now.
1100am est
We now have the transition into Lunch at 1100am and we’re hopefully going to see a move here we can trade with confidence this morning.
The ECB came out with new comments trying to calm down the world’s concerns about Greece.
(EU) ECB’s Nowotny: Calls for higher taxes, savings and structural reforms in Greece
(EU) ECB’s Nowotny: Calls for higher taxes, savings and structural reforms in Greece- Not expecting to see a recession in the US – Sees higher investment and wages in Germany
(EU) ECB’s Nowotny: Calls for higher taxes, savings and structural reforms in Greece- Not expecting to see a recession in the US – Sees higher investment and wages in Germany
Lets plan our attack on the Gold Futures:
– New lower lows on gold below 23.5 we want to sell retracements
– When we test support we look to buy with a 2step price reversal pattern
1120am est
10 minutes to the European close, so be prepared for the move at 1130am est. (if it comes)
We have crude oil making new higher highs, breaking out of the current range and up to the open of the day
