February 9, 2011
Day Trading Morning Prep Gold, Crude Oil, Dollar Index, Euro, E-mini Russell Futures
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 Ben Bernanke Speaks
10:30 Crude Oil Inventories
11:00 Transition into Lunch
11:30 European Close / Live Webinar in our Trade Room
Looking at todays news…we have Bernanke speaking at 1000am this morning, moved UP from this afternoon. This will likely have an impact on the markets today. Its hard to tell how MUCH of an impact this will have.
Ben Bernanke seems to have a way to make the markets slow down and listen, so look for low volume during this time. Combine this with crude oil inventories at 1030am and we have a possible time for some low volume, so we will watch the time closely after 10am est today.
As always, set your alarm 5 minutes before the news and then wait 5 minutes after the release to pick up on market reaction.
Lets take a look at the futures markets we’re watching today… the dollar index is always a great place to start.
The dollar remains at the highs of this bearish price channel.
We also notice that more accurately, price is trading sideways from 77.715 up to 78.120 at the highs of this channel.
remember the Dollar Index Futures Correlation
Sideways dollar = sideways gold / euro / crude oil / russell, etc
witht his information im looking to trade a sideways range on other markets today. The best way to trade a sideways market is to Buy the lows, sell the highs, and avoid the middle.
Also remember that when trading with the dollar index correlation, all we really need is the dollar to test the highs or the lows of this trading range.
A falling dollar from the highs is JUST as important to look for as a new low on the dollar, they both have the same result….RISING PRICES on other markets.
Look for the dollar to move down off the highs…and then on other markets If price breaks new highs I will Buy a Pullback at support
on the opposite side…
Look for the dollar to move up off the lows …and then on other markets If price breaks new lows I will Sell a Retracement at resistance.
I’ve also added a minor trend line up the middle of the price channel on the DX 03-11 34range chart and you can see this creates a wedge pattern.
Im going to be watching closely to see if the dollar can break this wedge, if not, expect the dollar to get narrower by the minute, and a narrow dollar will result in narrow trading ranges on other markets.
Crude Oil Futures
Crude Oil gave us some excellend opportunity to buy the lows of this very wide price Wedge Pattern on Monday and we made over 300 ticks doing so.
Today we find the crude 03-11 off the lows and apparently looking for the news today @ 1030am est for some long term direction.
Remember, im expecting a completely different personality BEFORE the 1030am news, and then wait to see the reaction to the news after 1030am
Its very tought o determine where this price will be AFTER the 1030am news on crude inventories today, so we need to focus on the main aspects of this chart, and plan our attack the best we can ahead of the news.
most important things to consider:
– Sideways range from 88.11 down to 86.00
– Sideways range ABOVE us is from 88.11 up to 89.00
– Price channel above us from 89.00 up to 91.00
– Narrowing wedge pattern in the light blue trend lines
With this information lets formulate a plan of attack, and then use our specific rules to execute this plan.
The most important is the most recent….the narrow wedge.
The key to a wedge is to Buy the lows, sell the highs, and avoid the middle. The closer we get to the end of the wedge the more narrow the price action gets, making our job as traders more difficult to profit.
I will look for the wedge to use for trading opportunities first.
Next, the short term sideways range is an excellent place to buy the lows and sell the highs.
Sell resistance of 88.00 and buy support of 86.00. Day traders and scalpers can buy support and sell resistance anywhere INSIDE of this range as well, with the biggest moves coming off the highs and lows.
Looking ahead if price moves up off these lows…
We will buy the entry into the range above us, so looking for longs when we get above 88.11. Remember what was resistance now becomes support when it breaks, so buy this support level, which is also the low of the range from 88.11 up to 89.00
sell the highs of 89.00, and use momentum to confirm with speed.
Keep an eye on the price channel marked off the highs. If crude news comes up bullish we will try to push price up into this price channel.
I will look to sell the 89.00 level first, but if price pushes through i will be Reading the Tape to see when i can Buy a Pullback at support if price makes it into the lower portion of the price channe
Gold 04-11 contract looks great for selling the highs today. We can see two price channels instersecting, and we are at the highs of BOTH of them.
the bullish price channel in pink trend lines is what we will watch most closely today. I want to sell the highs of this channel, and we can see an excellent location for this trade.
Looking to sell below 1361.1 but im going to want to see what the price action looks like. Im expecting the first move to be a Fake-out breakout … its just TOO obvious for that NOT to happen.
So dont get fooled, wait for new lows below 1361.1 and then Sell a Retracement at resistance for the safest and most effective way of selling this new lower low off the highs.
Look for profit at the trend in blue support, 1348.9, 1344, and then bottom of the price channel in the pink trend line around 1340.0
Swing traders, try and hold this trade all the way to the lows of the channel.
Day traders, take profit early, I would expect this price to bounce back up if the buyers hold today.
On the opposite side, if the buyers hold this support and make NEW highs im looking to Buy a Pullback at support and look for profit targets at the levels of 1376.3 and 1379.0 on the way up.
the euro futures trading in a narrow sideways range in the middle of the bullish price channel.
we always look to buy at support and sell at resistance, so the 34 range chart on the 03-11 Euro currency futures shows support at three locations:
– 1.3502, the low just below the price channel
– the low of the price channel, pink trend line around 1.3550
– 1.3588 is the low of the recent sideways range
on the opposite side, we want to sell at levels of resistance…very simple idea…but look closely for the three important levels
– sell the higsh of the channel, the pink trend line around 1.3750
– sell the highs of the sideways range at 1.3683
– sell the highs of the wedge pattern, using the yellow trend line running throough the middle.
The Dollar Index Futures Correlation tells us to watch the dollar for the future of the EURO today.
Sideways dollar = sideways euro futures market as well.
E-mini Russell Futures
The mini russell has broken the wide price wedge pattern and now trading sideways at the new highs.
We can see the swing high from Jan 18th is th 809.9 level, and we broke above that to the 811.4 level and came back down.
Trading sideways markets are easy, buy at support, sell at resistance, buy the lows, and sell the highs for the best price moves.
We let our emotions play into the trades which makes this SIMPLE rule sometimes hard to follow.
You can see lots of places to buy at support, including If price breaks new highs I will Buy a Pullback at support
