September 26, 2011
- in Uncategorized by schooloftrade
Price Wedge fails; Sell Retracements down to Major Support for 370 ticks of profit
Disclaimer
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Monday’s are a very different type of day of the week for a few reasons…
– Had time over the weekend to THINK and PLAN our trading ideas
– Usually a slower start then the other days of the week
– Usually get a later close to the morning session in the US
– Sometimes there isn’t much news on Monday’s
– Sometimes there was news over the weekend
We always have things on our minds that occurred from the weekend (news, personal stuff, trade ideas)
There may also not be much happening RIGHT NOW early on a Monday morning.
My main objective on a Monday morning is to take it slowly, not forcing trading, and get into my routine as quickly as possible.
825am est
Gold Futures is trading lower this morning after the supposed-solution to the mess in Greece. This caused traders to push the Gold contract down below the PLOD, making this an outside day.
At 3am this morning the Euro OPEN resulted in the move back UP inside the range from Friday, making this an inside day.
Then recently the price moved back below the PLOD making this an outside day transition.
We know how to trade BOTH outside and inside days, so we can plan our attack from here.
We have three price structures on the GC 12-11 contract:
– Price Wedge
– Outside Day (transition)
Price wedge tells me to buy the lows and sell the highs of the wedge, as well as to avoid the middle of the wedge and expect a fake-out breakout when we make new highs or new lows above or below the wedge.
Selling the highs of the wedge is also trying to sell the lows of Friday’s trading range, which means selling the wedge highs will be higher risk.
Outside Day transition tells us that if we break below the PLOD we want to be selling, and if we are above the PLOD we want to be buying.
In today’s example we have conflicting structures. We want to buy above the PLOD however it is also buying into the highs of the wedge, which is not recommended.
The sideways range tells me to sell the highs, buy the lows, avoid the middle, and to expect the fake-out breakouts at the highs and the lows.
We’ve found major support at the lows (1602.9) and major resistance at the highs (1643.4) for us to use.
What if price rises and what if price falls?
If prices rise today Im selling the highs of the price wedge around 1635.3, 1640.0 and 1643.4 as resistance above the wedge.
If price keeps moving higher above the resistance of 1640.0 i will then buy pullbacks with clear bullish sentiment, always keeping an eye out for the failure (fake-out breakout) above the wedge highs.
If price drops im selling below the PLOD 1631.7 as sellers will be in charge. Im selling new lower lows with retracements and avoiding the middle area of the wedge (1620).
If price makes it all the way down to the lows of the wedge I will be very careful not trading around the BMT (1615) and will look to take profit on my short positions and enter long at the wedge lows around 1608.8- 1602.9
If price makes new lows below 1602.9 we will look for the fake-out breakout first, and then selling retracements with new lower lows.
If price trades sideways this morning we will avoid trading around the middles of the ranges, around the OPEN 1632.9 and the BMT’s on various timeframes.
900am est
Crude Oil futures pit opens with price trading in the middle of Friday’s trading range, and around the OPEN.
We know we have news @ 1030am today that will likely give us some opportunities, so right now we remain patient and put together a solid plan of attack.
We have 3 price structures which give us easy clues for trading crude oil futures today:
– Inside Day
– Price Wedge
Inside day and the price wedge both have the same personality traits, they both tell us to sell the highs, buy the lows, avoid the middles, and to expect fake-out breakouts.
The price channel however, tells a different story. Price channels give us a directional bias and tells us that there will be breakouts.
Bull channel says to buy at support, buyers in charge, and to buy pullbacks with new higher highs.
If price rises on crude oil I will buy pullbacks with new higher highs and buying at the lows of the bull channel unless it is at the highs of the price wedge, and I will avoid buying into the highs of the wedge.
I will look to sell the highs of the wedge first, and then if those highs are broken I will look for the fake-out break and then if we see strong buying i will buy pullbacks above the 81.00 for the best opportunities to the long side.
If price falls im buying at the lows of the bull channel as major support and buying at support levels below the channel lows.
Im buying the support levels as price falls, and buying the PLOD 78.36. If price breaks below the PLOD we then turn OUTSIDE DAY and the sellers are in charge so we sell new lower lows with retracements.
We have major support down at 77.11 so if we break below the PLOD I will be selling down with retracements to this major support and then buy this major support as the lows of a major price wedge.
If price trades sideways I will avoid the OPEN 79.66, avoid the middle of the range trading ranges.
930am est
We wait for the US Markets to open, we should see more volume and opportunity after the 10am news this morning, so lets stay patient.
Euro futures have three easy price structures we can use today:
– Inside Day
– Sideways Range
– Price Wedge (bear)
All three of these tells me to buy the lows, sell the highs, avoid the middles, and look for the fake-out breakouts at the highs and lows of the ranges.
As price rises im selling at resistance. As price falls, im buying at support. I am trying to avoid the middle of any trading range big or small.
If price rises im selling the wedge highs and the resistance above the wedge highs. If we break above the 3600 then I can start looking to buy with new higher highs, however, on the way up we expect the failures, so sell as price rises.
If price falls im buying support below and the lows of the price wedge. Im buying the PLOD as support, and then if we break new lows below that PLOD we start selling aggressively as the sellers are in charge now.
As price keeps dropping im buying major support 3357 and then buying the lows of the bear price wedge just below it.
I can sell retracements all the way down below the PLOD until i run into the major support levels, and then I will buy.
If price trades sideways i will avoid the middle of the trading ranges, waiting patiently to sell the highs or buy the lows.
955am est
The Mini Russell Futures are also giving us some easy clues this morning.
We have three price structures on the Russell today:
– Price Wedge
– Inside Day
– Bull Price Channel
Price Wedge and Inside Day both have the same personality traits, they tell me to sell the highs, buy the lows, avoid the middles and expect the fake-out breakouts.
The bull price channel tells me to buy pullbacks with new higher highs, and to buy at the lows of the bull channel, as well as the support below the bull price channel.
If price rises im selling the PHOD as resistance first and then selling the Wedge highs and the resistance above the wedge highs looking for the fake-out breakouts.
If we get above the PHOD the buyers should be stronger than the sellers, but remember the price wedge reminds us to be very careful trying to buy into the highs of the wedge.
As price rises im selling at resistance, and as price falls im buying at support.
If price falls im buying the wedge lows 645 area and if we break new lows below this wedge we look for the fake-out breakout first, and then we sell retracements down to 637.5 which is the next major support. I will buy the 37.5 as support as price drops.
If we keep dropping below 37.5 we keep looking to buy at 32.3, 28.1 which is the PLOD as support. If we break below the PLOD we then have the sellers in charge we are selling aggressively with retracements.
1025am est
We are 5 minutes from the 1030am news, so sitting on hands at this time.
We had no trades until after 1015am this morning when gold made new lows, we waited to see confirmation that the sellers were indeed in control, and we sold new lower lows with retracements.
We then saw major support on gold at the lows (use your 89range chart) and we then saw a price reversal pattern off that major support for another winning trade.
Crude Oil in the middle of its price wedge, I will add some price alerts to the highs and the lows to remind me when to trade on crude oil.
Gold is now in a 89range wave short, so we are selling retracements on the wave lower, make sure not to sell into the major support 85.6.
1055am est
We go into the 11am transition into lunch with a bunch of profit today in a very short period of time.
Gold keep testing the lows and we keep trading gold profitably.
Recently we bought the bull price channel lows with a 4range entry and a 13range fast track entry for 50 ticks of profit.
Gold has a bull price channel, which means buying at support will be the higher % trades this morning until something changes.
As price rises on gold, im concerned about the bull channel highs as resistance, so beware buying pullbacks at the highs of the bull price channel, it will be sloppy.
Questions for 1130am
Do we know where the EXACT pullback or Retracement will be for our next trade?
No, we don’t know EXACTLY where the PB or RT will go to, but we have a really easy way to tell the AREA it should be.
We call them our ‘trigger zones’ and they tell us where the BEST entry locations will be for our Wave Patterns.
Find more info on the ‘trigger zone’ in the advanced course, or watch the video on the blog
– Watch the 2 videos in the advanced course
– Price Structures video details the basics
– Advanced Price Structures give you the Fib levels and the best ways to USE those price structures.
