August 1, 2011
- in Uncategorized by schooloftrade
Biggest Profit of the Summer, 360 ticks Inside day on Crude Oil
Monday morning are a little slower than other days of the week, and summertime Monday’s are even slower b/c we assume traders are distracted as they come back to work on Monday morning.
I trick my mind/emotions this morning by telling myself that my goal is getting into the rhythm, rather than taking big winning trades.
Economic News today:
We know traders are still waiting for the official vote of the debt ceiling. Agreement came on Friday, but the vote is expected today.
Clue #1 = Be patient for volume, as traders are likely sitting on hands until this vote comes out later this trading day.
1000am this morning we have Construction Spending (US Dollar, and Gold) and ISM Manufacturing (Crude Oil).
Clue #2 = we may see the best moves from 930-1100am this morning because of the news.
1030am Dead Zone = time between the last news event and the European close at 1130am.
Think of this time of the morning as the pullback of the wave pattern long, or the retracement of the wave pattern short.
Its the time of the morning when the big money starts trading in one direction or the other, and at the same time we all have more confidence in where price is headed and the market takes a strong direction for the rest of the day.
At 1030am today we need to be aware that price may slow down and reverse.
Look for the 3 signs of a price reversal to know when this is happening.
835am est
We have the US Dollar Index is sitting at major support of 73.915 inside a strong bearish price channel on the 89range chart (slower, big picture)
Day Traders need to use the SHORT TERM trend so let’s use the 13range and 144tick charts to find that and use it to make educated decisions today.
We see the short term bearish price channel on the 13range chart and we see the sloppy support from the 89range (73.915) holding strong.
Clue #3 = Falling Dollar = Rising Gold, Falling Crude Oil (lack demand)
Remember the US Dollar Index Correlation is broken on crude oil for the short term because of the lack of demand when the US economy slowed dramatically.
2 reasons why the correlation fails:
· Fear
Remember very important that we use the US Dollar Correctly, its whatever is happening RIGHT NOW.
I will read tape on the dollar and use faster timeframes to see its short-term movements.
855am est
We open the 89range on crude oil and we learn the following:
– Overbought momentum
– Highs of the bearish price channel
– Around the BMT
– Broken the lows of the bull price wedge
– Major Support levels below us
Sell the highs of the channel, and sell at resistance when we rise to new highs.
If we make new lows i will sell retracements, never selling the lows, waiting for a retracements.
As we drop, look for buying opportunities at the major support levels of 95.00, 94.85, 93.86 because we have a bull price channel.
If price rises to new highs im looking to sell first at 97.55, 98.00, 98.60, 99.50, 100.20 and 100.62.
And as the overhead resistance turns to support we then buy pullbacks. Beware the BMT at 97.10, and big round numbers 98.00, 99.00 and 100.00.
Example: if major support is at 95.00 I will avoid entering at 95.00 and wait to buy above 95.05, or sell below 94.95. 5-10 ticks away from the big round number.
Remember on MONDAY’s we use the PLOD from Friday, not from Sunday.
We open our faster, 34range chart on crude oil and we see the following:
Inside day just turned outside when we broke about the Previous Highs from Friday.
Clue #4 = Outside day on Crude Oil, higher highs above PHOD.
Outside Day = buying pullbacks, trade the breakouts, the market has a different opinion of value from the previous day.
935am est
Had to deal with a slight setback with charts crashing, but we keep our attitude in line and we save our work often and get back into the rhythm.
Just before the US Markets opened at 930am we took a slightly higher risk wave pattern long, and took profit off at the HOD.
We see a price wedge on the 34range chart so buy the lows and sell the highs, avoid the middle.
We have an OUTSIDE DAY on crude oil, and a strong bull price channel that tells us to keep buying pullbacks with new higher highs and look to buy at support levels as price falls.
NEWS: Debt vote sometime after 2pm EST today. Dems and Repubs are meeting as we type this.
1000am est
Construction Spending is flat, and ISM Manufacturing is lower than expected.
We knew the sellers were trying to push price lower, and we had to sit on hands at the 10am news so we missed the trade.
We are now back to the PHOD, so this is an INSIDE DAY below 97.20 and we consider it an outside day above the PHOD and look to start buying above 97.50.
I want to wait to selling below the OPEN 96.94 before I start selling crude oil.
Bull Channel says to buy at major support if we make lows outside the channel.
Inside day says to sell the break back below the PHOD.
Gold Futures are trading at the all-times highs, after a slight pullback late last week.
We know the best trades on gold will be to buy at support as price falls to the lows.
We know the All-time highs of 37.3 will be a very challenging area to trade so beware trading around the highs.
Wait for new highs on gold, and then buy pullbacks.
Also looking for buying opportunities at 12.4, 08.1, 05.3, 85.5, 83.8, 78.6
Its too bad, we had 2 easy wave patterns on gold, but they happened at the 10am news so we had to sit on our hands and wait.
1110am est
We’ve hit our goal twice over today, and we just took profit at the PLOD after selling the PHOD for over 250 ticks of profit.
Now we look to buy these lows and pull price back up to the same spot we started, at the PHOD and the OPEN around the 97.00.
We have the debt vote scheduled for 2pm EST today we assume there will be no Golden Lunch.
1125am est
We’ve finished the big move down the PLOD and now we’re trying to wait patiently for the bias in the market to show its form.
After a big drop we expect a big pop back up, and since we held the PLOD we expect when the buyers come in we will get more opportunities.
My plan of attack on crude oil for the balance of the day:
– We’re at major support so the buying opportunities will be higher %
– Buy pullbacks above 95.50, looking for a 2step long above 21range wave pattern.
– Avoid these big round numbers as we rise/fall, they are very sloppy today
– If price falls I’m waiting for new lower lows below the LOD 94.86 with a final target of 93.86 +5t = 93.91.
