February 14, 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

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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

10:30 E-mini Reversal

11:00 Transition into Lunch

11:30 European Close / Live Webinar in our Trade Room

Looking at today’s news we have a quiet monday morning, not much to report. Traders may wait for more info out of retail sales tomorrow @ 830am EST, so we will keep an eye out for the best times to trade; when we see speed and volatility enter the market.

Set your alarm 15 minutes before the US Open today, and we will keep an eye on the European Close @ 1130am to bring in more volume late in the morning.

Lets take a look at the charts we’re watching today:

Dollar Index Futures

The dollar shows us three things to be aware of this morning:

1. Bullish Price Channel in pink trend lines

2. Bearish price channel in thick yellow trend lines

3. Sideways trading range above 79.000

Remember the key Dollar Index Futures Correlation when using the dollar to make educated trading desicions.

Look to sell the highs of the price channel in pink around 79.000

Im also watching support in the light blue trend line in the middle of last weeks range. Look to buy support using the trend line in blue.

If we break back up above the 79.000 we will be inside the range above us, so looking for the dollar to RISE off the lows, which will give me selling opportunities on gold, crude oil, euro, etc.

Crude Oil Futures

Crude oil futures find themselves trading in a very narrow range tucked inside this tight wedge pattern.

We draw trend lines from previous support all the way to the most recent swing lows of 85.83 and 85.28 and we see this Wedge Pattern.

We see three things to consider on this chart today:

1. Narrow price wedge defined by yellow trend line support and blue trend line resistance
2. Short term sideways range from 85.13 up to 85.78
3. Long term sideways range from 86.00 up to 88.00

We need to be careful with this price wedge, it is very narrow. remember the rules of trading a wedge

Buy the lows, sell the highs, and avoid the middle

The next thing to consider is the most recent short term range, this will give us the ability to sell the highs and buy the lows, but we should also keep in mind the potential for a breakout of this range.

It is very narrow, so we will expect to see the first attempt for breakout as Fake-out breakout. Because of that concern over failed breakouts, we must follow these simple rules trading breakouts

If price breaks new highs I will Buy a Pullback at support

If price breaks new lows I will Sell a Retracement at resistance

Im keep a close eye on the 86.00 as well. If we make it back above 86.00 we consider the buyers successful getting price into the range above us, so expect price to go up to the 88.00 highs of the range above us.

Gold Futures

Gold futures are trading very similar to crude oil, making a very easy to see price wedge using trend lines as support and resistance.

We notice three key things on this chart:

1. Price Wedge from 1354 up to 1361
2. sideways range from 1354.4 up to 1361.5 (additional resistance at 1366)
3. Long term bullish price channel in pink trend lines

First, we need to breakout of this price wedge, so watch the speed and the Average true range of the dollar index for clues to when the gold with breakout.

We also want to buy the lows, sell the highs, and avoid the middle of the sideways market from 1354 up to 1361.

and we cant forget the BIG price channel in pink trend lines, so we will buy at the support (lows) of 1344 and sell the highs (resistance) at 1371.7

Remember the simple rule: buy at support, sell at resistance….easy to SAY…harder to EXECUTE 🙂

Euro Currency Futures

We have three things to consider on this chart this morning:

1. Major support level of 1.3433
2. Bearish price channel in yellow trend lines
3. Sideways range above 1.3500 to 1.3555

If we break below and stay below 1.3433 we consider the sellers to be successful in pushing price back down below support and now trading in the range below us from 3433 down to 3074

we want to sell the highs of ANY trading range, so If price breaks new lows I will Sell a Retracement at resistance.

Look for price to stall around the lows of the bearish price channel, but look to buy a pullback when we enter inside the price channel by making new highs.

If price keeps rising and can get above the big round number of 1.3500 we will expect to see price trade within this range as well.

So buy at support when we break above 3500, and sell at resitance, around 1.3555

E-mini Russell Futures

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