5 Trades for Friday | Crude Oil, Gold, E-mini & Euro Futures 01/28/16

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“We must
all suffer one of two things: the pain of discipline or the pain of regret and
disappointment.”

Notes for Tonight’s Newsletter:

Crude
Oil is bullish after an explosive move higher today, and after a
mid-morning correction
it looks like the bulls might be ready to take the next leg higher, but the
bulls need proof before they buy the next pullback.  We can see a bull channel
with an overshoot
at the highs, followed by an overshoot at the lows and a
measured-correction off the highs which ended in a trading range this
evening.  The trading-range has a
bearish-bias so we will expect sellers to ‘fade’
this break higher, so we will be looking for the PROOF
we need on the next pullback.  If the
bulls can hold this pullback that will give them the confidence to make a run
back to the 34.80 highs, but if they fail we will likely see a re-test of the
support levels at 32.88 and 32.31 before the buyers get another chance to take
it higher.

E-mini
S&P is stuck inside yesterday’s range with a narrowing triangle
this evening which tells us to fade
the breakouts until we see this market find a new direction.  Today was an ‘inside
day’ which means we traded inside yesterday’s range, and these types of
days usually lead to be head-fakes
at the highs and lows of the range before the market finds a new directional
trend.  The most common scenario on ‘inside
days’ is to see the first breakout fail and then continue in the opposite
direction for a few days afterwards, so we will be watching for failure
patterns at the highs and lows and then paying attention to the opposite
side once it rotates back again.  There
is a chance that tomorrow may be a strong breakout day, and if that occurs we
need to follow that direction.

Gold
is bearish this evening but after a completed measured-move
and an overshoot
of the channel lows the sellers will be waiting for a bullish correction to
sell more tomorrow.  Keep in mind, we are
going through ‘contract
rollover’ to the GC 04/16 contract so volume is a bit off this evening but
there’s no doubt about the context on the chart.  We have a bear channel with an overshoot
and a completed measured-move.  Sellers will want to see price ‘trap
high’ to get some buyers involved before they sell it back lower, and if
the market collapses lower (it’s been that type of week) then we will be
looking for a third symmetrical
leg.  We can start buying ONLY after we
see a new higher-high
and the bulls can hold a pullback.

Euro
is bullish but trading at the highs of the channel
and after three strong pushes higher today we know the buyers will be looking
for a DEEP correction off these highs before they buy more.  We have multiple channels in play this evening;
the long-term channel has 3 legs
higher, and today’s channel has a perfect measured-move
completed and it appears the buyers sold everything at the highs to wait for a
better price to buy it back lower. 
Sellers have a chance to get ‘short’ if they can hold the next pullback,
but the most reliable trades will come after a 2-legged measured-correction
off today’s highs for the next buying opportunities.