January 12, 2011
- in Uncategorized by schooloftrade
day trading crude oil, euro, russell, gold futures morning prep
Morning Prep January 12, 2011
Let’s begin our morning routine with the economic news for today’s trading session.
- 8:30 Import Price Index
- 8:30 Tim Geithner Speaks
- 10:30 Crude Oil Inventories
Looking at the news today we will most likely have to wait till after Tim Geithner speaks before we see any big moves, and crude inventories at 1030 today means we need to be careful with the CL contract.
Look for the personality on crude oil futures to be a little different on Wednesday’s because of the news.
Crude oil inventories also brings movement to the CAD for all your FOREX traders, so watch the JPY/CAD and CAD/USD for some good FOREX pairs on Wednesday mornings.
Set your alarm 5 minutes before the news and avoid trading 5 minutes after.
Now lets check on the dollar index futures
The dollar index is trading in the same sideways range from earlier this week.
As you can see the dollar dropped below this trading range, only to get sucked back into the range above 81.000
This tells us a lot about what to expect for this morning’s price action. When the dollar tries to break new lows without success it means that people are concerned about the direction of the dollar, so expect to see sideways price action on the markets we trade most.
Its easy to use the dollar as a ‘heads-up’ for the day ahead.
Slow and Sideways DX = slow and sideways CL, GC, 6E, ES, TF, etc
Moving DX = moving markets on CL, GC, 6E, ES, TF, etc
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Let’s take a look at the gold futures contract
We can see gold trading inside the same price channel from earlier this week, and you can see price acting exactly how we expected.
Sell the highs and buy the lows of the channel is the perfect strategy for today’s price action.
Selling below 1382.7 was the last entry short off the highs, and now we’re trading in the middle of the price channel, so we need to wait for the price to test the highs or the lows for the best moves.
Scalpers and day traders can trade in the middle of this 34 range price channel because they will have room to play inside the channel, but swing traders will always want to wait for the highs or lows to enter/exit their trades.
Im looking to buy support on the way down, so look for buys at 1377 and 1373.2
On the opposite side, ill sell resistance levels of 1380.5 1382.7 and 1386.4 on the way back up.
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Lets looks at Crude Oil futures
We have crude inventories at 1030am est today so that will have an effect on the price action before AND after the news, so trade with caution.
We can see crude oil has two things today:
– Middle of the bullish price channel (blue trend lines)
– Towards the highs of the sideways trading range (box)
You can we aren’t quite to the highs of the channel or the sideways range, so our best plan of attack is look for resistance levels to be a seller.
As price is rising we want to sell at levels overhead such as 91.74 and 92.00. we will even look to sell the highs of 92.58 and 93.00 with those trend lines above the 92.00 area.
Remember, we see price break the highs all the time, only to test a new level of resistance and then tumble back down into the price channel, we will be looking for that.
On the opposite side, if price falls I will look to buy at support levels of 90.46, 90.00, 89.58, and even 89.00 down to 88.00 because if we break new lows we will have the yellow trend line as support.
The big concern is the news today…how will it affect price action? Will it be slow and sluggish? We will have to wait and see.
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how does the euro currency future look today?
The euro continues to trade sideways along with the dollar index today. After breaking the wedge pattern lat last week the euro contract has been looking for some direction.
Sideways from 1.3000 down to 1.2870 we have plenty of room to sell the highs, buy the lows, and use levels of support and resistance within this range as additional buying and selling points.
Day traders and scalpers can trade inside this range, just avoid the middle. Swing traders will want to focus on buying the lows and selling the highs, and using patience to wait for the trades to work out…this market is trading very slowly so far in 2011, so keep that in mind.
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Looking at the e-mini Russell futures market next…
We have the mighty Russell futures at the highs of the price channel, so we have a perfect opportunity to sell these highs of 797.0 up to 800.0
We can see a double top at 800.0 so look for a simple price reversal (2-step) pattern for the entry on a faster timeframe to get into this short.
Selling at 800 look to take profit at the trigger line of 795.0 and keep an eye on the yellow trend line running through the middle of the price channel as additional support to consider for taking profit.
If price drops off the highs I will be looking to buy levels of support such as 788.8, 786.5, 781.0, and 777.6
I can see the BMT (big money trigger line) at 779.4 so expect price to be attracted back down to that level like a magnet.
Swing traders should be always watching that BMT level because that is where price will TRY to move to for swing trading moves.
As always, we will review all of this in our live trade room, and I look forward to seeing you there with us!
