October 20, 2011
- in Uncategorized by schooloftrade
AB = CD Pattern helps me day trade Russell and Crude oil futures
930am EST
Russell futures are trading in the middle of the bear price channel and just above the lows of Wednesday trading range. We want to sell the new lower-lows below the PLOD 688.9 and cover that short at the target of 676.8
If price moves higher and holds support at the PLOD we will then sell the price channel highs using the ‘reversal-zone’ as our entry guide.
1000am EST
The Russell is giving us lots of opportunity today however its very sloppy around the PLOD, so lets be aware of that and stay patient and wait for trades higher or lower.
1015am EST
Crude oil futures trading at the lows of the bull price channel and looking to break new higher-highs above the 86.86, 87.12, and then the highest percentage will be above 87.35 for the buying opportunity at these lows.
If price falls, I’m selling crude oil futures below the 85.31 down to the target at the BMT 83.94
Russell is trading now back @ the OPEN after going higher without any buying pressure, it went lower without any selling pressure, and now the market is clearly looking for directions as it sits above the PLOD and around the open.
We need to be very careful not to try and buy/sell the breakouts. Expect the fake-out breakout until we see something change.
1045am EST
Russell PLOD is still very sloppy, and we’ve learned a valuable lesson today about when NOT to trade around the PLOD or PHOD.
We noticed earlier that the PLOD was the magnet and that price action was having a hard time breaking above or below it.
We need to learn not to take trades around things like trend line, PHOD/PLOD, BMT and other levels that are clearly the price magnet.
1110am EST
We see the dollar index make new higher-highs and we sell retracement on crude oil futures and Mini-Russell Futures but the markets are still quite sloppy on this Thursday of OPEX.
Crude oil futures:
We have broken the lows of the bull price channel so we use the ‘price channel break’ price structure to plan our attack this afternoon.
If price moves higher we buy above 85.31 which is above the highs of the ‘reversal-zone’ on the price channel break structure. We will also buy above the PLOD as the sellers will have failed above PLOD. We take profit at the price channel lows at .85.60 and then look to buy the price channel lows above 86.64 and 87.12 for the more conservative entry.
As we move higher we take profit at the big round number 88.00 which is also the swing low from the price channel highs earlier this morning, and the final target of 88.80 uses the next major level of resistance. I will then look to buy a pullback to test the PHOD and then sell the PHOD as well as the resistance above it as we get up to the price channel highs.
If price moves lower we sell short below 84.64 using the ‘reversal-zone’ as our guide. Below the ‘reversal-zone’ we know the sellers are too strong we want to sell along with them. Take profit at the 89range BMT and major support at 84.00 . Then beware trying to trade around the BMT, this will be very sloppy.
Mini-Russell Futures:
Russell trading lower this afternoon with the dollar index making new higher-highs. We have a bear price channel on both the 89range and 34range charts. We know the ‘reversal-zone’ on the 89range chart has already been broken, so we want to stay focused on the short side this afternoon.
We then use the 34range chart to find a more recent price channel that we can use to plan our trades this afternoon.
If price moves higher off the lows of this price channel we will be waiting for the selling opportunities at the ‘reversal-zone’ start at 688.3. we will sell the price channel highs and the resistance at 690.8 and the ‘reversal-zone’ highs or 692.2.
If price moves higher above 92.2 we can buy pullback considering the sellers were not strong enough to keep price within the price channel. Target on the long trade above the ‘reversal-zone’ will be the BMT / OPEN around 693.0 and then the 95.1 lows of the price channel break ‘reversal-zone’ will be an excellent final target.
If price makes it back up into this ‘reversal-zone’ above 95.1 we need to be patient to see where price goes from there. If price moves higher above the ‘reversal-zone’ 97.0 we buy pullback up to the next major resistance at HOD 700.3 so take profit at the big round number 700.00
If price falls out of the ‘reversal-zone’ above 95.1 I will then sell retracement with the target of the lower ‘reversal-zone’ 92.2, PLOD 88.9 and 88.3 as the final targets for the short.
We will then sell the highs of the price channel and bring it all the way back down to the price channel lows.
If price stays at these lows we want to buy the price channel lows, beware trying to sell the price channel lows. So as price falls to new lower-lows we want to look for a 2-step reversal pattern with oversold momentum as a buying opportunity.
Euro is the exact same spot as it was earlier today. We want to sell below 1.3645 buying the support levels below the price wedge on the way down.
As price falls to new lows I’m buying the Euro until we break below the 3645 and then I take a new lower-lows and sell a retracement down to the next support level of 1.3573 for the target.
As price moves higher (and dollar index moves lower) we want to buy the Euro above the PLOD as the sellers will have failed with the target in the middle of the price wedge at the BMT 1.3766 area. I would HOPE the price would go up to the highs of the price wedge, but a conservative target will always be the BMT. Final target at the price wedge highs will be more aggressive.
I will then sell the PHOD as resistance first, also the highs of the price wedge, and if price move higher I need to look for selling opportunities at the resistance overhead 3905, 3925
