January 25, 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.
FOMC 2-Day Meeting Begins today (tomorrow is the FOMC Announcement @ 215pm EST)
8:20 Gold & Currencies OPEN
9:00 Crude Oil OPEN
9:30 US Market OPEN
10:00 Consumer Confidence
11:00 Transition into Lunch
11:30 European Close / Live Webinar in our Trade Room
I’m going to watch these events closely today, avoiding the market 5 minutes before the news and then waiting 5 mins after the news to enter a trade.
Lets begin looking at the charts today
The dollar index (DX 03-11) is trading in the same narrow range from late last week.
The dollar is the leader of the rest of the markets we trade, so if the dollar is moving we look great, but if the dollar is slow and sluggish we need to use caution.
We can see the dollar in the middle of the sideways range, which is the most dangerous area for the dollar.
I’m going to be looking for the dollar to test the highs of 78.630 or the lows of 78.000 for our markets of crude oil, gold, euro and Russell to start heating up.
Watch the speed of the dollar, watch the average true range (ATR) , and look for the dollar to trade outside of this trading range for the best price action on the markets we trade today.
Crude Oil Futures
Crude Oil (CL 03-11) is trading in a bearish price channel from Monday morning and making a big move down over the past 2 days.
Price channel’s are easy to trade; Buy the lows, sell the highs, and avoid the middle. We see plenty of wave pattern on the price channels, so look for momentum to be your guide on which patterns to enter, and when.
You can see the wave pattern from yesterday morning around 9am est, so look for more of those on the way down this price channel.
Looking closely we see that price action has stopped moving down this morning and is trading in a wide sideways range from 86.33 up to 86.78.
I’m looking to use this range for a trade entry this morning.
– if price rises im looking to sell resistance of 86.78 and 86.97
– If price goes sideways I will buy the lows of 86.33 and then sell the highs of 86.78
– If price drops im going to buy support of 86.33, and I will also sell the break of 86.33 if price drops below this sideways range.
With a bearish price channel my bias is on the short side, so im looking to be a seller at points of resistance on the way down…again…looking for wave pattern this morning will be a great idea.
Gold futures (GC 02-11) has a nice move down inside this bearish price channel. Looks a lot like crude oil right now, with new lows inside the channel to the downside.
Notice the wave pattern short setting up on this 34-range chart, we will be looking for momentum to confirm this entry short a little after the open this morning, so keep an eye out. J
Trading a price channel is very simple, but we tend to make it more difficult on ourselves with our emotions.
– If price rises im looking for selling opportunities at overhead levels of resistance, such as the trigger line on this chart around 1330.0
– If price stays flat im going to buy the lows and sell the highs of the narrow trading range
– If price drops im looking to buy levels of support, but with this being a bearish channel im more interested in selling the break of support, which quickly becomes resistance.
Remember, the key to a great day of trading is to buy at support and sell at resistance…can we remember this entry rule for day trading?
The bullish euro futures (6E 03-11) continues to swim ‘ upstream’ into this horseshoe pattern.
Ive drawn trend lines from all the way back at major swing highs down to the most recent swing highs which is making the euro’s move up more difficult.
As you can see the most challenging part of trading the euro right now is two fold:
1. the dollar has been sideways and sluggish, causing the euro to do the same
2. the trend lines of support and resistance that must be used for this type of price action keeps the moves on the euro very narrow, so we need to respect the trend lines and use them for our trade management.
With a falling dollar and a rising euro im looking for buying opportunities at support levels, so im looking for wave patterns long, 2-step long, and break long entry patterns at support levels.
With the dollar being so sluggish im going to use caution buying around the highs because we are seeing clear signs of weakness at the HOD, even though we will most likely see new highs, just not STRONG moves through the highs, so Buy a Pullback at support on the way up.
E-mini Russell Futures
The emini Russell has a messy chart on its hands this morning, take a look at all the things going on with the TF 03-11 this morning.
– We’re testing the support level of 772.5 with the yellow trend line
– We’re trading at the lows of the sideways range from 770.8 all the way up
– We have a bearish price channel in light blue trend lines
– We have a sideways range from 770.8 up to 779.5
With all of that said, we can apply some very basic rules to what we see:
– Buy the lows and sell the highs of any sideways range, so look to buy at support of 770.8 and sell at resistance of 780.6, 783.1, 787.1, and all the way up to 800.00 the top of the larger range.
– Avoid trading into trend lines, so keep an eye out for all the trend lines crossing around us here.
– Look for short wave patterns to use this bearish price channel
– Look for a price reversal pattern to get us long entry above 780.6
– Be careful selling the lows of 770.8, it will likely bounce off support, so wait to sell a clear retracement.
As always, I will be reviewing all of this live in our trade room this morning.
