April 27, 2011
- in Uncategorized by schooloftrade
Price Wedge on Gold and Crude Oil earns FOMC Day Profits
Lets review the 34range chart on the GC 06-11 contract
– Sideways Ranges from earlier this week and we are trading inside them, making this an inside trading day
– Bullish Price channel in pink trend lines gives this market some structure, gives our long trades a good final profit target, and gives us an idea of who is in control in the mid term
– Price wedge in blue trend lines, we are at the highs of the wedge
– Phod is right above us and we want to sell the PHOD as resistance
– We have a larger sideways range from 1519.2 down to 1484.0
– Big Money Trigger Line is down below us at 1494.3 and price will try to come down to test this level. The BMT = our final profit target, and we do NOT want to be entering trades around this level
900am est
– We have very slow and sloppy markets this morning ahead of the news @ 1230pm today
– The Dollar Index is trading in a very short term bullish price channel
– Rising dollar = falling prices on the markets we trade most
– Remember, its all about the direction of the dollar RIGHT NOW
– It appears the dollar must break the big round number of 74.000 to free itself of the resistance overhead.
– This may allow the dollar to run up to 74.160 which is the lows of the wedge above us.
– We do expect to see the dollar continue to rise within this price channel, and we use this to trade accordingly.
– Scalpers and short term day traders can trade in the opposite direction of the short term dollar trend
– Slower timeframe traders, swing traders for example will use this bullish channel as a sign to stay net-short. Rising dollar will mean falling prices in the LONG RUN
930am est
– My job every morning is to define the market’s personality
– Sometimes the best way to do this is to take a trade and see how the trade reacts (don’t be afraid to use a demo on that)
– Today our first trade was on gold, and the pattern looked great, the rules lines up, but the trade went nowhere.
– We may see a LOT of this today, where everything looks perfect, but the concerns over FOMC have lower volume from fewer traders participating.
1100am est
– We’ve been battling our emotions all day today on gold and crude
– I almost got caught with my guard down and missed a few opportunities
– “we weren’t expecting much today, so I wasn’t fully prepared”
– Gold was sloppy until it dropped, we were able to sell the highs of the wedge for a big winner, but price action made it very hard to trade with confidence
– Crude Oil drives us NUTS today!
– Market doesn’t move a tick until 10am, the same time when we know better than to trade crude oil before the 1030am news
– So we finally got crude moving at the WORST POSSIBLE TIME.
– Crude dropped to new lows, and bought those lows for a nice big winner
– Now lets plan our attack on crude for the rest of the day:
– Beware the lack of speed, as the day gets closer to the 1230pm FOMC announcement this market will get harder to trade
– I want to buy the lows of the wedge, buying above 112.00
– This is a dangerous area, it’s a big round number and the OPEN is 8 ticks above.
– We have to remember the open will always be sloppy when volume is low.
– If prices keep rising im selling 112.64 and the highs of the wedge
– If prices fall im staying away from trading around the BMT @ 111.15
– I will buy support at 111.00 but beware the BMT
– Buy support at 110.71
