February 14, 2011
- in Uncategorized by schooloftrade
Discipline to wait for the best patterns earns profit day trading crude oil and gold futures
830am est
– We check the morning prep on the blog
– We complete our news worksheet for today
– We noticed there is NO NEWS today
– We also looked at the balance of the week and see that
o OPEX on Friday, wacky wed
o FOMC Meeting mins on Wednesday @ 2pm EST (people may wait for this info)
o Holiday Weekend ahead of us in the US (President’s day)
o We are concerned that traders will be hitting the exits early this week ahead of OPEX and ahead of the long weekend.
o I would assume that traders will use this long weekend as an excuse to skip the OPEX on Friday
o Look for the volume to drop after we see the news on Wednesday @ 2pm EST.
840am EST
– The dollar at the highs of the price channel, we would expect the dollar to fall from this resistance.
– Watch the dollar now to see clues to what’s coming later today on the markets we trade.
o If the dollar drops off the highs = looking to buy the gold/crude at support
o If the dollar pushes new highs = we look for selling opportunities at resistance levels on gold and crude, euro and Russell.
– We check the average true range of the dollar and we see concerning things: lower highs and lower lows tell us the dollar (and the other markets) are trading more narrow as the day goes on.
– We also check the dollar speed. The pace of tape indicator measures the speed of the dollar
– This can change VERY quickly with the smallest of news, but right now the dollar is very quiet, slow, and red pace of tape.
– Let’s wait for the dollar to pick up speed, for the average true range to make new highs, and let’s make our job as easy as possible.
– The dollar correlation is NOT just for direction.
– When the dollar is moving quickly, we see better results on the markets we trade.
845am EST
– Gold breaks out above the highs of the price wedge
– We want to sell the highs FIRST
– Then look to buy at support, buy a pullback at support
– We notice crude oil futures are sharing volume between the 03-11 and the 04-11 contract.
– Crude oil rolls over monthly, so after the middle of the month see always see this occur.
920am est
– The crude oil futures are trading in such a narrow sideways range that all the trigger lines are in the way for us to sell short at the highs.
– By the time we break all the support levels we are now in the MIDDLE of the range, and we don’t like trading the middle.
– Notice the BIG WICKS on the candles at the highs and the lows
– This tells us the market is looking for more direction
– Very challenging price on crude oil this morning.
945am est
– We continue to look for the best times with highest speed and most volatility to take trades
– We discussed earlier this morning about the lack of follow through, or the lack of consistency
– We see good speed, enough to get us into a trade, and then the speed drops off and the trade reverses.
– Look for MORE to get into a trade today, and look for LESS to get out.
1000am est
– We’re taking our time looking for clues to the remainder of our morning.
– The markets have been very inconsistent
– High speed gets us in, then speed slows down and takes us out.
– We notice the dollar is now trading inside the range from Friday, making this ‘inside day’ on the dollar much higher risk.
– Whenever the dollar trades INSIDE the
1035am est
– The crude oil tests new highs and trades into the overhead resistance in the thick trend lines
– The buyers appears to be in control, but the momentum is overbought and the speed is very tough to see consistency.
– Difficult to BUY THE HIGHS when you are not sure about the speed.
1115am est
– We buy the 21range wave on gold and take a very quick target at the next level of resistance
– We then see the crude oil break below the PHOD, we always look to sell below the PHOD
– The gold takes off to new highs as soon as we get out of the trade, confirming the LACK of consistency in the markets we’re trading.
– Speed and volume gets us IN the trade, and then the speed and volume dies so we get OUT of the trade, following our rules, only to see the market pick up again and move in the direction of our final target.
1125AM est
– Let’s get ready for the 1130am est European close
– We see more volume as the traders leave euro markets and join us in the US markets
– The best thing to do right now is prepare for the next trade after the volume comes in at 1130am est
– Crude oil futures have tumbled off the highs and now sitting in the middle of the sideways range.
– Look to buy the lows, buy at support for our final trade today after the 1130am euro close
