January 26, 2011
- in Uncategorized by schooloftrade
Day Trading Morning Prep Gold, Crude Oil, Dollar Index, Euro, E-mini Russell Futures
Let’s begin our morning routine with the economic news for today’s trading session.
· 8:20 Gold & Currencies OPEN
· 9:00 Crude Oil OPEN
· 9:30 US Market OPEN
· 10:00 New Home Sales
· 10:30 Crude Oil Inventories
· 11:00 Transition into Lunch
· 11:30 European Close / Live Webinar in our Trade Room
· 2:15 FOMC Day
With my news ready for today, I will set my alarm clock five minutes before the news, and then wait five minutes after the release of the news to make trading decisions based on the REACTION from the futures markets we are trading.
Today is FOMC Day, which is characterized by high volume early in the morning, but look for slowing volume earlier this morning as traders get ready for the announcement at 215pm EST.
We also have crude oil inventories today, which means we will be looking for personality changes in the CL 03-11. We expect to see decent volume early on crude oil, but after 10am EST we will expect to see the crude oil slow down and chop into the 1030am news.
Look for a completely different personality on crude oil AFTER the news, so we will review this REACTION after 1030 and make decisions based on what we SEE.
Lets get our day started by looking at Dollar Index Futures
The dollar appears to be trying to push new lows this morning after trading sideways in this narrow range for the past week or so.
You can see we have oversold momentum on this 34 range chart of the DX 03-11. This tells me to expect the dollar to try and bounce back up into the range we just left.
Also, with today being FOMC Day I cant expect much from the dollar BEFORE the 215pm announcement. Once we know more from the fed at 215pm today the dollar will certainly take on a life of its own.
So im looking for a Fake-out breakout on the dollar today, and we will watch this chart closely all morning to see where we go.
Remember the negative Dollar Index Futures Correlation for more info on how we trade using the dollar.
With the dollar flat we can expect other markets to be flat as well.
Pay close attention to the speed of the dollar this morning as we prep for FOMC.
Crude Oil Futures
Crude oil is trading sideways at major levels of support this morning ahead of its big news @ 1030am est.
We can see the yellow trend line as support that we drew yesterday from the swing low back in November 2010.
As crude has been dropping we have been locating major levels of support, and you can see the 86.00 as major support.
We can see the range from 86.94 down to 86.12, so look to use this range as our guide.
– If price rises im buying support above 86.94
– If price falls back down im looking to buy support at 86.25
– If price goes sideways im going to sell the highs of 86.94
– If price goes sideways im going to buy the lows of 86.25, 86.12, and 86.00
– If price drops im going to sell at the break of support(turn to resistance) below 86.00
– Sell a retracement if we break below 86.00, be careful selling the breakout, look for fake-out break first b/c of the type of day it is today
So as you can see we have plenty of options for trading on crude oil right now, but since we are at major support, im looking to buy support levels.
Look to buy the pullback if we break above 87.00 and look for profit at 87.56 and 87.85 for a nice move back up to the highs of this trading range from Tuesday.
Gold futures may have a tough day today, we have a few key levels to watch out for on this 34-range chart.
– Downward channel in pink trend lines
– Sideways trading range in the white box from 1337.7 down to 1322.2
– We have a double bottom as major support from a previous low
So how am I going to trade this today?
– Sideways trading range means I need to Buy the lows, sell the highs, and avoid the middle
– Price channel means im going to do the same, sell the highs and buy the lows
– Double bottom means I need to buy the support at 1322.2, which is also the PLOD, very important we don’t try to sell into this level.
Since we have a price channel my main focus will be the short side today, so looking to use the highs of the channel and the highs of the price range as great selling opportunities.
Wait for overbought momentum to Sell a Retracement at resistance when we break new lows, and look to sell the highs with a price reversal pattern, such as the 2-step.
The euro futures contract continues to make gains as the dollar index drops.
You can easily see the dollar choppiness has led to the euro grinding its way up this 34-range chart, so lets plan the best way to trade this market.
Falling dollar = rising euro, so we need to keep that in mind most often.
Im looking to the buy side right now with the dropping dollar, but whats the best way to trade this chart?
– Buy a pullback when we break new highs
– Don’t get trapped buying the breakout, the choppy dollar will make you pay for those with a loss
– Wave patterns will work best, breaker patterns will likely see overbought/oversold momemtum
– Selling the highs will always be an easy way to scalp or day trade for easy profits, but swing traders will stay on the buy side
– Look for levels of support to buy on the way up, do NOT get wrapped up in the emotions of the falling dollar and ignore your rules.
– Watch the speed of the dollar, when its slow, avoid the euro, when the dollar is fast look for patterns on the euro
– The dollar ATR will tell a great story, look for rising dollar ATR for better trading times on the euro.
The key to the euro is using the dollar, so watch the speed and the direction of the dollar, looking for ideal spots of SUPPORT to buy and hold for profit at major levels of overhead resistance.
E-mini Russell Futures
No guidance on the Russell today.
