June 21, 2011
- in Uncategorized by schooloftrade
100 ticks on Gold, 100 ticks on Crude Oil, use this tomorrow
845am est
We begin our day with the US Dollar Index, which has been trading in the middle of the 89range wedge pattern.
We consider this to be a transitional area because we are above the ‘trigger zone’ and at the lows of the Bullish Price channel (use trend channel tool in NT7)
The 89range charts tells this area is a higher risk, potential sloppy and sluggish area on my chart.
This may result in slow and sloppy markets we trade most, crude oil, gold, Russell, euro, etc.
The 89range tells me the BIG picture, but I need to know what the short-term trend is RIGHT NOW so I can use this info as a day trader.
Swing traders will use the 89range, but day traders need something faster.
13range on the DX 09-11 and we can see the short term trend is bearish.
We can see lower highs and lower lows inside of this bear price channel coming off the highs on the dollar from middle of last week.
How do we use this info to make money?
– Falling dollar will give us buying opportunities on the markets we trade (buying pullbacks with new HH’s and buy at support as price falls.
– Sideways dollar (if we fail to make new LL’s) will results in sideways ranges on the markets we trade so we will buy the lows and sell the highs of the range we’re in
– Rising dollar will give us selling opportunities on the markets we trade.
900am est
Let’s review the CL 08-11 contract just as the crude oil pit opens in Chicago.
The 89range chart shows me the BIG PICTURE, the most important levels we will be using.
We see the following from our 89range chart:
– BMT is overhead, a price magnet
– Below the major price wedge above the 96.50 area.
– Sideways range from 94.60 down to 92.60 and 91.50
– Bearish price channel using the trend channel tool in green
– Momentum is overbought on the crude chart
The 89range tells me the most important I need today, now I use a 34range chart (faster timeframe) to plan my precise entry levels.
Our 34range chart shows us the following:
– Inside day, below the PHOD and above the PLOD
– Inside day says to trade inside the range you are in. avoid the fake-out breakout and look to buy support, sell resistance, and avoid the middles.
– Bull Channel off the recent lows
– Bull price wedge off the recent swing highs
– Sideways ranges were from the 89range chart
Our plan of attack on crude oil futures this morning @ 930am est:
– Inside day tells me to trade inside the range we are in.
– Buying at support, selling at resistance, and being extra cautious with breakouts, avoid the fake-out breakout.
– Bull channel on crude and the bear channel on the dollar tell me to look for buying at support as the high percentage trades today.
As price falls:
– Buying support and then selling as support turns into resistance using a retracement.
– I do not sell the lows, I buy the lows, or at least we try first.
– Avoiding the OPEN at 94.00
– Buying the low of day at 93.81
– Buying support 93.64, and the lows of the bullish price channel
– Buying 93.40 support
– Avoid 93.00 big round number
– If price keeps dropping we buy support at 92.60
– And avoid the previous open at 92.38 and avoid 92.00 BRN
– Buy the PLOD at 91.51
As price rises:
– I’m selling first at resistance and then buying pullbacks with new higher highs
– I’m buying above the PHOD (buyers will be in charge)
– I’m selling at 94.80 the highs of the bear channel (13r)
– Sell the wedge highs from the 21r blue trend lines 97.75
– Sell the 94.95 resistance, highs of the range
– Selling resistance overhead at 95.10, 95.75, 96.10
– Avoid the big round number of 96.00 and beware trading around the lows of the wedge above us around 96.10-96.20
– If we break through 96.20 then look to sell the highs of the 89range bear channel and the highs of the bull channel from the 34r chart.
1000am est
Crude Oil has been trading above and then below the PHOD, making this an inside day, turned outside, then back inside.
Remember that we use the PHOD as a very specific strategy when watching for trades.
The US Dollar Index is no longer in a strong trend short, its bouncing off the lows and trying to trade sideways.
When the dollar trades sideways, so do all the other markets we trade.
Change in personality on dollar = change in personality on the markets we trade.
This may be the change in the slop and chop ahead of lunch and ahead of tomorrow’s fed day.
1030am est
The personality on the crude oil looks worse than the dollar, as the DX 09-11 makes new lower lows.
What could people be so concerned about?
– Crude Oil Inventories tomorrow (crude oil)
– Only 1 news event today
– Tomorrow is Fed Day
– It’s the start of the fed meeting today
– Inside the dead zone= after the last news of the morning and before the 1130am est European close.
1030am est
Let’s review gold futures now that we have some personality in the market.
The 89range chart of the gold 08-11 contract shows bearish price wedge and a bearish price channel.
We are at the highs of the major price range and we want to sell these highs on the GC.
1115am est
We’re waiting for the market personality to re-enter after the 1130am est European close.
Meanwhile we check our slower timeframes and we see a FLAT trigger line on the 34r.
This tells me we have sideways market and that trading in the MIDDLE (chop zone) will be very high risk.
Sideways markets are easy…buy the lows…sell the highs…avoid the middle.
We also see the candlestick wicks are very long and drawn out. This tells me the sellers TRIED to make new lows, but lack of strength kept the price above 94.00.
1125am est
We prepare for the European close we want to be very selective with the trades we take.
Crude Oil trading in a sideways range around the 34r trigger and BMT. Sideways range means I want to buy the 94.00 lows and sell the 94.70 (trend line resistance) and 94.88 highs.
Gold futures are trading at the range highs and the PHOD, and we look to sell these highs. The dollar was dropping earlier this morning but now the dollar is slowing down and trading somewhat sideways, this give us the chance to sell these highs of the range on the GC 08-11 contract below 1546.0
If we make new higher highs on gold we will buy a pullback, considered high risk b/c we are at the HIGHS of the 89range wedge.
