Crude Tumbles ahead of Inventories as Gold hits Record Highs

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The James’ Report: Professional Resources for Professional Traders

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European equities all lower overnight in the wake of the debt ceiling agreement on Tuesday.
Equity Indexes across the Globe tumble; Russell, Dow, ES all breaking major support
Gold Futures continue into record-breaking highs
Crude Oil drops forth day in a row on less demand in the US and abroad
Moody’s Affirms US Sovereign Debt Rating AAA
ADP Employment report this morning to set the tone for Friday’s NonFarm Payroll Number

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Today’s Economic News:

This morning we begin with news at 830am ADP Employment report, which is used to set the tone for the major news on Friday morning, NonFarm Payrolls. Traders will then move into the 930am US Market open, followed by Factory Orders and ISM Non-Manufacturing. We then have 1030am Crude Oil Inventories which will be very important for us today. Remember to use the 3 Phases of Crude Oil Inventories to plan your day today around this news. After 1030am this morning it’s a variable; we may see high volume and lots of speed, or the market may go to lunch early as it is a summer trading day ahead of major news later this week. The most important thing for me today will be to wait patiently for the 1030am news to get a reaction from the market, not jumping in too early after the 1030am news is released. We will discuss more of this before the 1030 news is released.

News for Day Traders

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Looking at the Charts:

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The US Dollar Index is trading lower this morning (crude bearish, gold bullish) and we can easily see the short term trend defined on our 13range chart posted below. Use the ‘trend channel’ drawing tool in NinjaTrader 7 to make it easy to see. I’ve also added a price alert to the swing highs and lows to alert me to when other markets are likely to be breaking out or reversing. Remember to use the US Dollar Index Correlation when using this market today.

US Dollar Index Futures

Crude Oil Futures continue to tumble this morning on lack of global demand coming from the economic slowdown. We’re sitting on Major support at this time (92.71) and looking to make new lows again today. We can see the Bull channel in pink was broken a week ago and new this bear price channel in green has taken shape. We can see levels of support marked below us, and our plan of attack today will be to use this strong bear channel as our guide. Selling at resistance as price rises up, and selling retracements with new lower lows will be the highest percentage trades this morning, while keeping an eye on the major support levels below us as excellent profit targets and potential reversal points for us to buy at support.

If price rises up today on crude oil we have a price wedge above 93.86 so look for buyers to enter the market above that area.

Crude Oil Futures

Gold Futures continue into record-breaking territory this morning as traders and investors around the globe see no end in sight for this economic slump, less demand for any growth and more demand for ‘shelter’ from falling prices in Gold futures. The key to trading gold right now is staying away from these highs and waiting for price to come back down to major support levels looking for buying opportunities there. Im looking to buy the lows of this bull price channel, as well as price levels such as 54.3, 34.6, 18.8, 12.1, 08.1, 05.7 and so forth. The key is not getting emotional with your trading at the highs, very sloppy, and difficult anything big at new highs, so wait for the big pullbacks and buy at major support.

Gold Futures

The Euro Futures are trading in the middle of the narrow price wedge and we consider this to be a big red flag for things to come this morning. The only thing worse than this would be if the US Dollar Index was in a similar position (middle of narrow wedge) so we need to be careful today until price can move higher or lower on the Euro contract. You can see the bullish price channel in pink trend lines, so look to buy at support as price drops and buying pullbacks with new higher highs above 4438 today as the higher percentage trades. If price drops we’re buying at major support 4130, 4115, 4085, 3990, 3920 etc. and if price rises up we’re selling resistance first of 4438 and then buying above that levels as we will be back in our bull trend channel. Key today will be patience to wait for price to move from the middle of this wedge. Get us up to 4438 or down to 4130 and we see lots of opportunities to trade there.