June 9, 2011

Crude Oil moves higher, Dollar trades sideways, and Traders Wait for Jobless Claims

Traders around the world are reacting to higher prices on crude oil as OPEC’s Meeting ends in a stand-still on Wednesday.

The Dollar Index stabilized this morning after spiking oil prices and lack of confidence pushed the DX 06-11 contract to new lows on Wednesday.

Traders this morning are preparing for news on Jobless claims early this morning, and we look forward to the G8 Summit this weekend.

We also will have contract rollover tomorrow on the Dollar, Currency Futures and the E-mini’s we trade.

We’re hoping for some early volume this morning with 830 news on Jobless Claims, International Trade as well as news out of Canada that will drive crude oil prices around.  We finish up the morning with Nat Gas Inventories and will hope for a Golden Lunch after 1130am.

The Dollar Index stabilized this morning after making new lows early in Wednesday’s trading session.  This morning we can see not much has changed since last time we checked our 89Range chart of the DX 06-11 contract. 

You can see in the chart below that we are at the lows of the major price wedge, we have a narrow sideways range after a very strong downtrend from the highs.  We can easily see levels of support below and resistance above and will use 74.090 and 73.540 as our guide today.  I will be using the dollar correlation to make educated decisions today when trading gold, crude oil, Russell, euro futures.
DX 06-11 89Range SchoolOfTrade.com
Crude Oil made new higher highs on Wednesday, but looking at the 89range chart you can see that the big picture really didn’t change.  The question really all boils down to…are traders convinced that prices will be materially higher going into the summer, or will these comments from OPEC blow over and prices fall back down to 100.00 and lower (as they likely should). 

You can see we are at the highs of the major price wedge, and have developed an easy sideways range to use.  We can see major resistance overhead to use a profit target if prices go higher, and we see the BMT and 100.00 is below us, which will act like a price magnet.
CL 07-11 89Range SchoolOfTrade.com

Will traders react with fear today and drive prices to 102.75 and 103.30?  If so, we will be looking to sell first, and then buying pullbacks when the tape confirms higher prices.  If we break to new lows below 100.75 we will likely see 100.15 and 100.00 big round number so look to sell retracements with new lower lows.   And of course, if the market stays sideways we will sell the highs and buy the lows making for an easy plan of attack.  We are ready to profit from crude oil no matter which direction the news takes us today.

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    Anonymous - June 9, 2011 Reply

    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

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