Wedge Pattern Divergence Day trading crude oil futures
FYI to our members!
I’ve added the “divergence rules” to our entry rules cheat sheet.
Available for download in the advanced course section at the top. “Entry Rules Cheat Sheet”
820am est
– Dollar index futures have 3 key components to look at today
o Wide trading range
o Outside day, turned back into an inside day
o Strong up-trend
– All of this tells us that we ‘should’ see some decent moves today
– Be careful if the dollar goes sideways inside the trading range from yesterday (77.860 – 77.270)
– Also look out for support from the top of the channel (yellow line)
845am est
– Crude oil futures are trading well off the highs from late last week and we have a nice wedge pattern to work with this morning.
– We are in the middle of the wedge, so I cant really trade with too much confidence right now, so I need to wait for the highs or the lows to be tested in order to trade with the lowest risk.
o Sell the highs of the wedge
o Buy the lows of the wedge
o Sell/buy the breakout of the wedge
900am est
– Gold futures are trading in a tight sideways range, in the middle of the wedge pattern
– The range is so narrow that trading on gold today will be a little more challenging.
1000am est
– The euro futures sitting on the lows of the trading range and the lows of the wedge pattern and im looking at a very slow and sluggish market.
– We want to buy these lows around 1.3800 to take advantage of the highest percentage opportunities.
– We have 2 options for trading the euro at these lows
o I can buy the lows using a 2-step reversal pattern with entry long above 3847
o Profit targets will be 58, 68, soft 3895, and hard final target of 3940 which is the trend line as resistance.
o We can also sell short if we can break the support levels from the wedge and the lows of the day with entry below 3768, and profit targets of 55, 25, soft 3705, and final hard target of 3680 which is the group of yellow support levels on my auto levels indicator.
– We also see the crude oil futures are at the lows of the wedge, and we have a buying opportunity at these lows.
o Entry long will be above 81.74 with profit targets of 90, 05 (trend line), soft 28, and hard final target of 64 for the final ¼.
o If we break down below the wedge, looking for entry short below 80.88, with profit targets of 75, 60, soft 40, and final hard target of 60.05 if we can push these lower lows.
1100AM est
– We never got the crude oil futures to break the low of day at 80.88, but instead we had a reversal at the lows of 81.00 and we took the 2-step reversal long entry into the lows of the wedge.
– Buy the lows of the wedge is the main goal with this trade
– Entry long was also a fast track trade above 81.34
– We took +5/+10 and then managed a runner all the way to the highs of 81.68 for the final target
– Along the way we noticed lots of support in the market, we placed our stop correctly, and we used the divergence on our trade management chart and our 4-range chart to tell us when to hold the trade or when to fold the trade.
– We earned over 50 ticks simply buying the lows and waiting for the highs to be tested for the final target.
1115am est
– The euro continues to trade sideways and very slow
– Most likely due to the slow dollar, which is caused by traders waiting for the FED Meeting Minutes at 2pm EST today.
– We can see a reversal pattern selling the highs of this trading range, with entry short below 3825 and very tight profit targets at 16, 3805, and the lows of the range at 3795
– We don’t have much room for this reversal, so take your money and run!
