January 27, 2011
- in Uncategorized by schooloftrade
Day Trading Jobless Claims and Durable Goods Orders on Gold, Crude Oil, Dollar Euro and Russell Futures
825am est
We’re looking at the dollar index to give us clues to the day ahead of us.
The dollar is trading in a narrow wedge pattern, and wedge patterns tell us to expect consolidating price action.
The more the wedge develops the narrower the trading ranges will get today.
The goal is for the dollar to breakout of this wedge, speed increase, ATR rises and we get the other markets to start moving as well.
DX 03-11 is telling us we may need to be extra careful today until this wedge is broken.
Let’s take a look at the speed and the ATR
Speed is very slow, but its early and that can change quickly.
The dollar average true range has a perfect storm on its hands.
– New lower lows overnight
– Lower highs from yesterday
– And we’re making new lower lows as we open today.
This tells us the transition into narrower trading ranges from earlier this week.
830am est
– We have important news to watch at this time
– Jobless claims and durable goods
– Both are very important news events.
– We notice that GC 02-11 volume is starting to roll forward to the 04-11, so we will keep an eye on that for Friday/Monday rollover.
– BOTH news events come out dollar bearish
– Jobless claims higher
– Durable goods lower
– Both are bad for the US economy, both are USD bearish
– Bearish DX = bullish markets on CL/GC/Euro, etc
840am est
– We see a well defined wedge pattern on multiple timeframes on the gold futures.
– Wedge patterns on the DOLLAR have apparently bled over into the markets we trade.
– Look to sell the highs of the wedge, and buy the lows of the wedge, beware the middle.
– We see the big trading on gold from 1352.4 down to 1321.3, but we need to also keep an eye on the short term sideways range from 1340.7 down to 1331.5
– I will be looking to buy the lows and sell the highs of ANY trading range, so look for the short term range first and then go out from there.
900AM est
– We take two winning trades on the gold this morning
– 1 wave short on the 13range chart, took profit at the lows
– Then we saw momentum oversold at the lows of 1331.5 and we decided to buy the lows with a 2step pattern (reversal) on the 4range chart, taking our profit at the 13range trigger line at 1329.7
– Crude oil opening at 9am est
– Crude 03-11 contract is VERY easy to see how choppy and sideways the price action has been the past 3 days.
– We’re seeing a wedge pattern and price trading in the middle of the range.
– Beware trading in the middle of the range for swing traders or long term day traders.
– Scalpers and short term day traders can buy the lows and sell the highs within this range.
– The best opportunities will be at the highs or the lows.
920am est
– We’ve got to be careful trading after 915am est before the US open.
– We have slow price action, the dollar still chopping around in the wedge, and we have gold and crude oil also sitting in the wedge.
– Looking for the next pattern on the gold and crude oil we notice two things:
– At the top of the wedge (sell the highs)
– Momentum is overbought on the 21r and 13r charts.
– The momentum indicator gives us the CLUE for what to do next.
– I want to sell highs as much as possible, and with overbought momentum this makes a selling opportunity the best trade to take.
– Sell the highs of the wedge, and use momentum as your guide.
– If we break new highs, breaking out above the wedge, DON’T CHASE the trade with this momentum overbought, just simply wait for the next level of resistance and sell there instead.
945am est
– The dollar average true range is pathetic and dropping today.
– The gold market is testing the 34r trigger line and we’re looking for a wave short, but the trend line support appears to be making this more challenging.
– We need to wait patiently to try and find WHO CONTROLS the gold price.
1000am est
– We see pending home sales are 1% higher than expected.
– Rising home sales are GOOD for the US economy, good USD = bad gold = bad crude
– Rising USD after the news will be selling opportunities on the markets we trade most.
– We DO NOT try to predict, we react.
– Im now watching the DOLLAR REACTION
– The markets have reacted as if they knew this was coming, so we need to to continue to wait for better movement.
– Remember we have the VERY BIG gdp number on Friday, so this may be the sign of an early lunch.
– Tough to tell, lets keep waiting.
1015am est
– We have some free time with the markets slow so lets open your charts and make sure we’re ready for the next pattern.
– We see the gold market at the highs and looking for 34range wave pattern short.
– We also see a lot of support below us which is keeping this short trade from triggering easily.
– The long side on gold is a little scary…
– Momentum is all overbought
– We have overhead resistance at 36.4 and then 37.7 so we don’t have a big open space for a long trade.
1025am est
– We take the gold wave short and we take our profit early based on key things:
o News @ 1030
o Momentum on 13r oversold (we saw that already)
o Speed slowed down
o Dollar sellers (I’m short)
o Trend line as support (held last time)
1100am EST
– We were almost done with our day when all of a sudden the markets on gold and crude oil made new lows.
– We were initially expecting the lows to bounce and we were looking for a long trade at the lows
– We saw oversold momentum, which made selling the lows very difficult.
– After watching for a few more moments we realized the bond sales @ 11am was one of the highest of the year, which is USD bullish, and bearish on the markets we trade.
– The reaction to this larger than expected bond sale was to sell off on gold and crude oil.
– When we began to look for an entry short we noticed that momentum was oversold.
– I have a hard time selling the lows when momentum is oversold.
– So we look for a bounce off the next support levels.
– I took a 2-step long at the support level but the price went up 10 ticks and then took out new lows.
– Once we started seeing that the sellers were indeed in control we then had to plan a short trade.
– Our rules tell us to buy these lows, but eventually we trade what we SEE, not what we KNOW>
– Reading the tape, watching the speed, and using support and resistance we then took 2 BIG winners on the gold market, and three less than desirable trades on the crude oil.
– We now expect the market will try to rise off these lows with the speed slowing down after the European close @ 1130am est.
