FOMC Day Trading Strategy | SchoolOfTrade Newsletter 03/14/17

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“Expect The Best, Prepare For The Worst, Capitalize On What Comes.”

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Crude Oil is bullish after today’s API Report erased the entire move lower this morning, and this strong spike higher tells us to watch for four (4) specific scenarios tomorrow.

S&P is bullish, but we have two big clues, and one major level of resistance that will give us opportunities to play BOTH sides of the market if the conditions are right tomorrow.

Gold is bearish, but looking closer at the market’s context this evening shows us that the “pendulum swing” was completed, so we’re looking for failures.

Euro is bearish, but sitting at multiple levels of support is telling us to stay patient and find opportunities to ‘sell high’ tomorrow.

FDAX is range-bound, and with price sitting at the high of the range, we’re looking for a “fake-out breakout” to finish the measured-move tomorrow.

We have a BIG day tomorrow; Fed Day, Election Day, Inventory Day, IEA Oil Market Report, the list goes on… and as we do every evening, we have a plan to find reliable trading opportunities as well.

Crude Oil

Crude Oil is bullish after the API Report, with a strong spike higher this evening, which has ultimately taken everything back after the news from Saudi Arabia sent prices tumbling lower earlier this morning.  This spike higher reminds us to look for a spike & channel, spike & range, spike & wedge, or flag patterns tomorrow.  Right now, the most important thing to remember is to avoid chasing this move and “buying high”.  The first pullback is going to tell us a LOT about where we go from here, and we will also keep an eye on a possible reversal in the overnight session because we have inventory news tomorrow and we know that is common as we head into 10:30am EST tomorrow.

Inventory Levels for Wednesday:  49.34, 48.92, 48.50, 48.08, 47.66, 47.24

E-Mini S&P

E-Mini S&P is bullish in the short-term, but the bear channel we saw earlier today still hasn’t give us that re-test of the low, and with a measured-move overhead we will be watching for opportunities on both sides tomorrow.  The bulls have short-term control, but the measured-move tells us to look for a “trap” below a prior swing to avoid buying into resistance.  On the flip side, if the sellers were to show us some strength, we could then look for a “trap” in the opposite direction for a move back down to re-test the low.

Gold

Gold is range-bound and trading at the completion of the pendulum swing, well below the low of the rand this evening.  The bears finished the session with a strong move down, but putting this context, we can see the sellers are exactly where we want them.  Now the goal is to use the ‘2-Try Rule’ to buy into seller-failure tomorrow for a move back up in the range.  The only concern for tomorrow is getting this done before it gets too late with the FOMC announcement in the early afternoon.

Euro

Euro is bearish with a wedge and trading at multiple levels of support this evening, which tells us to beware selling low and focus on staying patient for opportunities to ‘sell high’ tomorrow.  The bears finished the session with a strong move lower, which tells us that we may not get much of a correction, which is fine by us because all we need is to get price up above some of these short-term resistance levels for a trap and back down to re-test the low.

FDAX

FDAX is range-bound and trying to complete the pendulum swing up to the measured-move tomorrow, but the bulls are running into the high of the range, so we need to be careful.  The goal is to buy the lows and sell the highs of the range, so our best option for tomorrow is to look for buying opportunities at the low of the range or look for a fake-out breakout pullback above the highs with a target up to the measured-move.