June 22, 2011
375 Ticks Day Trading FOMC Day & Crude Oil Inventories
We begin with the 3 phases of crude oil:
1. 8:00-10:00am Pre-news
2. 10:00-10:35am During News
3. 10:35-12:30am Post-News
It’s quite simple, we need to be sitting on hands after 10am (10:15 is the latest we can trade) and then watch the release at 10:30am and look for clues for WHO’s in CONTROL.
Trade the reaction, not the news event itself. And then keep an eye on volume and know when to call it quits.
How do we trade FOMC? Very similar to Quad Witching, to a Friday….get in, be selective, and get out early before the volume drops.
845am est
We review the dollar index first this morning and we see the price wedge on the 89range chart.
We are in the middle of the wedge, in the transitional area (trigger zone) and this will be sloppy on the dollar and sloppy on the markets we trade most.
The 89range chart is a little too slow for day traders. We need to know the US Dollar Index short term trend. 13Range chart will show me this.
Our 13range chart shows us the following:
– Medium term bear price channel
– Short term trend = sideways
– Price wedge and narrow price action
– Middle of the recent trading range
How do you profit from this information?
– Sideways dollar = no bias for direction
– We can trade long or short on the markets we trade today.
– Keep an eye on the short term trend.
– If the dollar makes new lower lows (downtrend) we then will buy support levels on crude/gold/euro/Russell/etc
– If the dollar makes new highs (uptrend) we will sell resistance levels on the markets we trade.
– It all depends on what the US Dollar Index (DX) is doing right now.
– This wedge will be a very significant risk to sloppy markets today if we cant breakout higher or lower.
Why is the dollar so sluggish at 855am in the morning? We assume people are waiting to hear the 1230pm FOMC announcement today.
930am est
We review the crude oil futures, starting with our 89range chart and we see the following:
– Price Wedge above us, lows are 97.50 area.
– Bearish Price Channel
– Sideways Range inside of a sideways range
– Flat trigger line = sideways on the 89range chart
Now let’s move to a faster chart timeframe to get the specific levels I will use for my trading today.
Let’s review the 34range chart on crude oil
– Inside day = below the PHOD and above the PLOD
– Sideways ranges from 95.10 down to 92.88
– Bullish Price Channel (medium term)
– Bullish Price Wedge
How that we know this information, lets plan our attack trading crude oil.
If price rises:
– I’m selling resistance first, and then buying pullbacks with new highs second.
– Inside day = sell the highs and buy the lows, beware the fake-out breakout. Beware trading the breakouts.
– Selling 94.31, highs of the wedge at 94.60, 94.88, 94.95
– Avoid the big round number of 95.00
– Sell the PHOD at 95.10
– Sell the overheads major resistance and top of the channel at 95.74
– I don’t want to buy the highs unless I have a real good reason.
If price falls:
– Im buying support levels first, then selling retracements with new lows.
– I don’t sell the lows unless we have a good reason for it.
– Im buying support below me at (945am) 94.36, 94.31, 94.03 will be higher risk b/c of the 34r BMT.
– Avoid the BRN 94.00
– Buy support 93.84
– Avoid the OPEN 93.66
– Buy the channel lows/wedge lows at 93.48
– Buy the LOD at 93.24
– Avoid the BRN 93.00
– Buy the PLOD 92.88
– As price makes new lows through these support levels we then look to sell with a retracement.
