January 14, 2011
- in Uncategorized by schooloftrade
Day Trading Gold Futures Selling Retracements with Dollar Index Correlation
800am EST
Let’s begin our day with the dollar index.
We’re preparing for the 830am news today, hopefully we get some good volume to finish up this first week back.
The dollar is trading all the way at the lows of the sideways range on the daily chart.
We’ve been expecting this drop all week, but the choppy sluggish dollar had a hard time dropping, which resulted in the choppy price action we saw earlier this week.
2 scenarios on the dollar:
1. the dollar bounces off this support
2. the dollar breaks support and keep dropping
If the dollar rises = everything should fall, so look for selling opportunities at levels of resistance.
If the dollar drops = everything should rise, so look for buying opportunities at levels of support.
As we use the faster timeframes on the dollar (34range) we see more information now about where price is likely headed.
We see plenty of room for the dollar to drop back to the trend line support around 79.00 so look for the drop first, then the bounce off the support of 79.00
Now lets check the dollar Average true range so we can anticipate changes in the market’s personality
ATR on the dollar is low, but appears to want to rise. Rising ATR is a good thing = wider ranges = more profit per trade.
Dollar speed is very slow, but this can change very quickly, so always watching the speed of the dollar to confirm the entries on other markets we trade.
830am EST
– The news for retail sales, CPI all came out as expected, and the markets have most likely already priced that into the current price.
– Gold futures selling off at the lows….is this the long term move or is this just a test of the lows?
– Average true range on gold is rising, so looking for opportunities to SELL below 1367. And take profit down at the trend line as support.
– 13range chart shows very sloppy price action (sideways candles, no range, and flat trigger line
– We are in a very transitional area on gold futures, the change from one bracket to the next.
– So we’re looking for the 1364.4 area to be the choppy area on our charts.
– Buy above 1364, sell below the 1364, and keep an eye on speed and volume around this area to define market sentiment.
– The market will give me clues in the POT and the Time and Sales window on what to expect next.
– Buying opportunities on gold above 1366 (trigger line on the 34range)
– We draw a trend line as overhead resistance on the 34range chart, and this reminds us to beware of sloppy price action on low volume days around trend lines.
930AM EST
– We saw higher than expected industrial production news @ 915am this morning which has the gold trying to rise off the recent swing lows.
– Industrial production rising = stronger economy = bearish on gold (shelter market)
– Gold has low volume, slow speed, and support levels which are keeping the price from dropping.
– The best way to trade the news is to be prepared for the patterns, and simply wait to see how the market reacts.
– With gold appearing to want to rise, we look overhead and identify the areas to take profit for our long position
– Take profit at the previous low of day, and if we break above the PLOD look for more targets at 1372 and 1376 (BMT)
945am est
– We have two trades under our belt on gold, but now after the 930am US Open it appears the market participants are sitting on hands (or grabbing some lunch) while the news comes out for 955 and 1000am EST.
– We will expect the traders to find the confidence that’s been keeping them on the sidelines after this 10am news.
– Gold average true range is FALLING (perhaps the gold market has gone to an early weekend?)
So how did the first week of trading in 2011 turn out for you? Follow the link below and let us know how your doing.
