Big Round Numbers and Sideways Ranges for OPEX Friday

Markets are trading sideways this morning on lack of major news overnight out of Canada and Japan.   The Dollar Index dropped overnight to test a key support level and headed right back up into its narrow trading range to bring commodity and equity markets right back into their sideways ranges as well.

This morning we find Crude Oil trading sideways at 100.00 and Gold sideways at 1500.00, exactly where we left them on Thursday evening.  These big round numbers are major psychological price levels, so we must assume this is a sign of ‘indecision’ in these markets.  If the markets knew WHERE they were going they would be going there right now…in the meantime we will be looking for clues of a future breakout of these narrow ranges.

Not much news overnight, nothing really happened to give us any major clues for this morning’s price action.  Today is OPEX, which means options will be expiring tomorrow (Saturday) and today is the final day of trading before the options expire so traders will be finishing their ‘balancing’ today.

OPEX also means we have no major economic news today, which will surely be a concern.  Lack of news is always something we worry about especially on a Monday or Friday because we assume traders will use that as an excuse to skip the day and have some fun.  For this reason we will be watching volume, speed, and average true range considerably.

My plan today will be quite simple.  Get in the market as early as I can (safely) and look to leave early as well.  The volume will assumedly be lighter than average and the best moves will be earlier than later, so keep that in mind.  Always a good idea to lock up easy profit early and hit the road on a Friday.

Dollar Index

The Dollar index is a clear example of what happened, which tells us what to expect later today as well.  The dollar dropped out of its trading range, most likely on CAD or JPY news overnight. When the dollar drops like this and then comes right back up into its range it tells me the entire WORLD is looking for clear direction for the near term price moves.  Will the dollar go up?  Wil the dollar go down?  Time will tell, and that will bring the entire futures market along with it.  Right now this proves to us that these markets need s little ‘push’ in one direction or the other.  Will we get the ‘push’ today?

Crude Oil

Looking at Crude Oil as an example of how the dollar index has made other markets very sloppy.  You can see the Crude Oil trading sideways in a somewhat wide range at the highs of the wedge, and inside a strong bear-channel.  This price structure is very easy to trade at first glance, but look at the swing trade triggers at the bottom of the chart.  Those two signals are firing off opposite to each other.  Slow says short…while the fast says long…again confirming a market looking for direction today.

I will be watching these markets closely, reading tape, volume, and speed looking to make this OPEX trading day a profitable one for all of our tradign community.