Avoid these Traps on Tuesday | SchoolOfTrade Newsletter 12/05/16

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Crude Oil is bearish after the buyers failed to re-test the highs and price collapsed on news this afternoon that OPEC nations continue to see record-high output even in the wake of the recent agreement to cut production. 

E-Mini S&P is bullish and trying to re-test today’s high and possibly reach new all-time-highs tomorrow or later this week as well. 

Gold is bullish, but trading at the high of a trading-range this evening which means the most reliable buying opportunities will come at the low of the range or after a successful breakout-pullback through the highs. 

Euro is bullish and trading at major resistance this evening after a strong move higher for the bulls today. 

FDAX is bullish and trying to re-test today’s highs after the buyers waited for the deep pullback and now have a target to go back to re-test the highs and possibly the prior-month high waiting overhead. 

Crude Oil is bearish after the buyers failed to re-test the highs and price collapsed on news that OPEC nations continue to see record-high output even in the wake of the recent agreement to cut production.  The sellers have clear control after price collapsed this afternoon, but only the most aggressive sellers will try to sell at such a low price, so our plan will be to look for selling-opportunities up at resistance levels overhead using ‘traps’ and ‘failures’ for a move back down to re-test the lows.  Buyers on the other hand, have no proof of control, and need to stay patient because the only reliable buying opportunities right now will be taking profit targets on selling-opportunities tomorrow until we see proof of a change in direction.

E-Mini S&P is bullish and trying to re-test today’s high and possibly reach new all-time-highs tomorrow or later this week as well.  The bulls have control after a strong push higher this morning turned into a bullish spike & channel which has pulled-back just above the ‘correction zone’ and is now attempting to re-test the highs.  The big concern right now is that the most reliable buying opportunity has already occurred on the most recent pullback, so buyers need to either wait for price to pull back again for another chance to ‘buy low’, or they need to look for ‘traps’ to avoid buying into the highs.  Sellers on the other hand need to be careful because any pullback will likely be seen as a buying opportunity until we can break and hold below the rising support trend-line for a potential move back to re-test today’s low.

Gold is bullish, but trading at the high of a trading-range this evening which means the most reliable buying opportunities will come at the low of the range or after a successful breakout-pullback through the highs.  Our plan for a trading-range is always the same; buy the low, sell the high, avoid the middle, and focus on failures, so the buyers need to stay patient until we either rotate back to the lows or successfully breakout to new highs tomorrow.  Sellers on the other hand, need to stay patient because the most recent move off the lows was quite strong, so the best option to sell will be after the buyers re-test the high of the range (2-try rule) but FAIL to successfully breakout of the range and price will collapse back down to the low.

Euro is bullish and trading at major resistance this evening after a strong move higher for the bulls today.  The buyers have control, most likely trying to fill that weekend gap waiting overhead, but only the aggressive buyers will want to buy these highs after such a strong bull run, so the most reliable buying opportunities will come after a deep pullback off the highs or a strong, successful breakout-pullback through the highs tomorrow.  Sellers on the other hand, need to stay patient because this type of strength most likely kept a lot of buyers on the sidelines waiting for a pullback and the next deep pullback will likely be seen as a great buying opportunity with a target going back to re-test the high.

FDAX is bullish and trying to re-test today’s highs after the buyers waited for the deep pullback and now have a target to go back to re-test the highs and possibly the prior-month high waiting overhead.  The buyers have control, but the most reliable buying opportunity was back at the low of this range, trying to buy now will be much more aggressive and would require you to use a stop below the range-lows which would be a horrible risk-reward-ratio.  The most reliable buying opportunities at this point will be either a successful breakout-pullback to new highs or wait for price to finish rotation back to the low of the range and then look for seller-failures to buy the lows again tomorrow.  Sellers on the other hand, need to wait until this becomes a bear market, and in my opinion, that won’t come until we can get and hold below the ‘battle zone’ tomorrow.