June 9, 2011
- in Uncategorized by schooloftrade
Inside Day told me to avoid Fake-Out Breakouts
Jobless Claims come out higher than expected, and within the range of the average 430k jobless claims which we have been used to seeing.
This is the same concern that Bernanke spoke about on Tuesday night, so these sluggish jobs are making it tough to sell the idea of a recovering economy.
We begin with the Dollar Index and we see the the 89range at the lows of the wedge and trading sideways. This is considered transitional area b/c of the lows of the wedge and the sideways range.
We then use the faster 13range chart to see the sloppy and sideways (narrow) price action that tells us what’s REALLY going on RIGHT NOW.
Our plan of attack with the dollar is simple:
– If we stay trading sideways we look to trade sideways on the markets we trade most. Buy the lows and sell the highs, avoid the middle.
– If the Dollar rises, we then look to sell retracements with new Lower lows on crude, euro, gold, Russell, etc.
– If the dollar drops, we look to buy pullbacks with new higher highs.
845am est
Dollar index makes new highs, crude oil drops and gold tests the lows of its narrow wedge.
900am est
Crude Oil opens the pit at 9am and we trade sideways back to the open of the day at 12am est.
This should be telling us something…nothing has changed.
Back at the open…after trying to push new highs (and failing) we now get a BIG CLUE from the market.
Trading at the OPEN = lack of direction, lack of confidence in future price
We take that as = stay patient, be selective and focus on the best areas to be waiting for.
We use our 34range chart to plan our specific attack on the crude oil futures:
– Inside day so we want to sell the highs, buy the lows, trade inside the range we’re in
– Expect fake-out breakouts on an inside day
– Double top on the 34r chart tells us to buy at support and expect another test of the PHOD 101.89.
– Price Channel in green trend lines, buy the lows of the channel and sell the highs of the channel, it also tells us that buying pullbacks and buying at support will be the highest % opportunities today. This may change, but right now this is the case.
925am est
We see the PHOD on Crude tested and fails. This is a sign of weakness in the market, and this may be the first step toward the price reversal back to the big round number of 100.00.
1000am est
We earned 133 ticks on only 3 trades on crude oil following our simple plan of attack.
1030am est
The personality on crude oil begins to get slow and sloppy.
We had a very keen eye on the best trades this morning, using the INSIDE DAY as our guide.
We bought the lows when price dropped below the open.
We sold the highs when price dropped off the highs above the open.
Now the price sits at 101.45 around the BMT’s and the OPEN of the day.
The personality now SCREAMS at us…wait for more info! We need more feedback aka higher prices, lower prices, SOMETHING!
Lets plan our attack for the rest of the morning:
If price rises:
– Sell the wedge highs at 101.60
– Sell HOD and PHOD 101.89
– Sell the highs of the major bull channel (pink) 102.15
– Im selling at resistance first, and then buying pullbacks with new higher highs
– I will not buy at the highs.
– It does NOT look very friendly to the long side above 101.50, so beware.
If price falls:
– Im buying support levels first and then selling retracements with new lower lows
– Avoid the OPEN 101.28
– Buy wedge lows 101.0 but be careful around the big round number.
– Buy the channel lows at 100.75
– Buying support below the bull channel at 100.44
– Buying major support from our 89range chart at 100.15
– Avoid the BMT at 100.19
– Avoid the Big round number of 100.00
1130am est
We’ve been waiting for the 1130 european market close and MORE VOLUME.
Its been a very challenging hour from 1030 to 1130 sitting on hands was difficult but we knew where the best AREAS were and we wait for those.
We got Hurricane news that sparked new higher highs on crude oil.
We know better than to buy the highs, so we waited to buy pullbacks.
We also know that FADE THE HURRICANE news is the best option because the REAL supply and demand has NOT changed. This is all fear based and is only temporary.
Gold rises on the fears about Greece when we hear comments from the rating agency Fitch about its concerns over Greece’s recovery.
