March 9, 2011
- in Uncategorized by schooloftrade
Day Trading Morning Prep Gold, Crude Oil, Dollar Index, Euro, E-mini Russell Futures
‘We are what we repeatedly do. Excellence, therefore, is not an act, but a habit’ – Aristotle
Let’s begin our morning routine with the economic news for today’s trading session.
8:20 Gold & Currencies OPEN
9:00 Crude Oil OPEN
9:30 US Market OPEN
10:00 Wholesale Trade
10:30 Crude Oil Inventories
11:00 Transition into Lunch
11:30 European Close / Live Webinar in our Trade Room
Looking at the news this morning the spotlight is on crude oil futures. We heard reports overnight from OPEC that the world’s supply of crude oil is adequate, and we have crude oil inventories news at 1030am est today.
We will watch closely to see what the personality of crude oil looks like this morning, and try to wait for only the best time of the day to get involved.
Lets take a look at the markets we’re watching today…
The dollar did exactly what we thought it would on tuesday, and this morning we’re looking for the dollar to make a tough decision…are we going to break this downtrend and rise back above 77.000 or are we going to roll over and drop to new lows.
The Dollar Index Futures Correlation is vital to our trading success, so if the dollar rises to new highs im looking to sell, and if the dollar drops to new lows i should be looking to buy.
The key with using the dollar is to remember this simple rule:
- Buy at support levels when price is dropping
- Sell at resistance levels when price is rising
We will watch the dollar on a 34range and 13range chart, looking for major levels of support and resistance, as well as the short term price action.
Crude Oil Futures
Today we need to watch closely at the CL 04-11. With 1030am inventories news today, and comments from OPEC already this morning it will be vital that we wait to see how the market ‘looks’ this morning.
The slow timeframes (89range) show us right in the middle of the trading range, so swing traders should be aware of that. We want to wait to buy the lows and sell the highs for slower timeframe traders.
Looking at the 34range chart we can see three important things to consider this morning:
- Price Wedge in yellow trend lines
- PHOD and PLOD
- Price CHannel in blue trend lines
We can see the most important thing first is the Wedge Pattern in thick yellow trend lines. We want to buy the lows and sell the highs of this channel, and we are at the highs right now.
We can use the levels at or above the wedge highs as resistance levels to sell short. Look to sell the highs of the wedge at 105.19, 105.42, 105.70.
Buy the lows of the wedge at 104.55, 104.21, 104.00, 103.83, 103.72
Remember that as price rises im a seller first, then a buyer. If price breaks new highs I will Buy a Pullback at support
If price falls im buying first, and then selling. If price breaks new lows I will Sell a Retracement at resistance
Next, lets consider the fact that we are trading INSIDE the range from tuesday, which means a few things to us.
First, it means we have a lack of cdirection in the market. The lack of new highs or lows means people are waiting for more info to make a decision where to go.
We can sell the PHOD and buy the PLOD in this situation easily, so keep an eye on those levels. Im looking for a simple Price reversal pattern at these levels to get into the trade.
Finally, lets keep an eye on the short term price channel in light blue trend lines. We want to use this as our guide.
Im looking at the LONG side being the igher percentage side this moring until this BULLISH price channel is broken.
Look to buy at support levels as price drops, and then wait for new highs to be made above resistance to then buy a pullback at support.
BIG TRADE OF THE DAY: Sell Short at the PHOD and take profit at the lows of the price channel, at 104.00.
Gold has been very sloppy and slow the past 2 weeks, mostly due to the lack of direction on the dollar. Lets pay attention to the DX 03-11 to see when the gold will really be moving today.
Looking at the slower 89range chart you can see we are near the lows of the price channel, so swing traders will be looking for buying opportunities today.
(we will be doing a special swing trading webinar today in our training session)
Our 34range chart clearly confirms, we have three things to watch on gold today…
- Price Channel in Green Trend Lines (major)
- Price Channel in Yellow trend lines (minor)
- PHOD and PLOD
The big picture on gold shows us at the lows of the price channel in green trend lines. This is a very wide channel, so swing traders look to hold this trade all the way to the highs of the channel.
Day Traders and Scalpers can use this major bullish channel to use long trades as the highest percentage opportunities.
Next, we notice that we have recently broken the short term bearish price channel, and headed back to test the highs from tuesday,.
We are trading INSIDE the range from Tuesday, so we will use that as our guide. Look to sell the PHOD as resistance, and look to buy the PLOD as support.
If price breaks new highs i will buy a pullback, and if price breaks new lows I will sell a retracement.
Selling resistance levels of 1435.9, 1437.8, 1441.7
Buying Support of 1423.2, 1416.1, 1410.6
