Crude Oil Inventories JUMP…why buy pullbacks?

The news out of the euro zone this morning about rising debt concerns has us expecting a dollar correlation that might be a little different. Today we may see the Gold and the Dollar both rising as traders take profit (or dump) euro contracts and pick up the USD and the Gold to take shelter from the ‘storm’ 830am est We see Durable Goods orders are dropping. This tells us that fewer factories are creating and shipping products. The first thing I think about is crude oil inventories at 1030am, and I will be using this info to make an educated decision. Remember…we had Manufacturing Indexes from NY, VA, Philly all were LOWER than expected. This leads us to believe the manufacturing sector in the US is slowing down. Slowing will use less crude oil, and this will be a variable we use later today. I will be suspicious of FALLING inventories at 1030am est today. 845am est We review our news today and we know today’s 1030am crude oil inventories will be something to watch closely. We’re expecting to see a late morning move after 1035am, but with the GDP number at 830am on Thursday we may see traders take off early and wait for the news tomorrow. Tough to tell right now, but we will be looking for the late morning move, and if it never shows up we know why. Lets review my dollar index: 89range chart shows me… Strong bull price channel, we are in the middle Bull Wedge, and we have broken above the highs Swing Traders would use the 89range to confirm a trend, and then stay net-short on their currencies and commodities. We aren’t swing traders here in our trade room, we are intra-day traders, so we use a faster timeframe for more short-term trend. 34range chart shows me… Trading sideways above the wedge highs Big round number of 76.000 Bear channel off the highs Lower highs and lower lows BMT is below us After review of the two timeframes on the Dollar we can tell that swing traders would have a strong uptrend, and day traders have no trend at all. We have a bear channel, but is not very strong, it looks more like a sideways range. We may see new lower lows, and when that happens it will confirm the channel exits. (bear channel = buying pullbacks on Crude and Gold) Sideways dollar = sideways markets on Gold, Crude, Euro, Russell, anything you want to trade. Inside Day on the Dollar = Inside day on the markets we trade. (think about Gold…its OUTSIDE right now…will it drop back down and become INSIDE just because of the dollar?) No directional bias today (not yet) I can buy the lows (support) and sell the highs (resistance) as long as the trade fits my rules. 945am est Lets prep for the crude oil: 89range chart shows us inside a narrow price wedge at the highs of the major price wedge The BMT is above along with big round number of 100.00 which will act like a price magnet We see multiple sideways ranges, and we have the highs of these ranges right above us as well. Lots of reason for the price to rise, but lots of resistance waiting for it. Lets open your 34range chart and find the specific price levels we want to use this morning. 1015am est We have yet to take a single trade this morning. We had reason to believe this morning might be a little slow ahead of the news, and we really don’t know if we will see anything after the news either (news at 830am tomorrow) Lets plan our trades on crude oil: If price rises: – Sell the highs of the wedge at 99.54 – Sell the highs of the channel at 99.54 – Avoid the 89range bmt at 99.74 – Avoid the big round number of 100.00 – I will sell the resistance levels first, then look for new higher highs and then buying pullbacks. – I do NOT buy the highs, I buy pullbacks. – I will sell resistance levels at 100.09 (high risk around the BRN) – Selling at 100.37, 100.42, 101.46 If price falls: – Im buying at support levels first, and then selling retracements with new lower lows. – I will avoid the BMT on all chart timeframes – Avoid the OPEN at 98.78 – Buy the lows of the channel and the lows of the range at 98.43 – Buy the LOD at 98.20 – Buying PLOD 97.85 and buying at 98.12, 97.90, 97.85 – And then buying the lows of the bull channel in blue trend line around 97.50 – I am waiting for 10:30am to begin trading on crude oil now its after 10:15am and price action will be nasty. 1025am est We wait for 1030am news and while we wait we prepare for the rest of our morning. Lets review the Gold Futures: Strong bull channel that took price from low to highs and broke new highs above the major wedge. The BMT is well below us, so this will act like a price magnet. We have a sideways range below us on gold, so look for that to be a price magnet as well. At the highs of the channel, at the highs of the range, and levels pulling it lower. This along with the dollar dropping tells me to buy pullbacks with rising prices on gold. If the buyers fail at these highs, look for price to tumble all the way down to 1500.00 and the BMT.