January 27, 2011
- in Uncategorized by schooloftrade
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
8:30 Durable Goods Orders
8:30 Jobless Claims
9:00 Crude Oil OPEN
9:30 US Market OPEN
10:00 Pending Home Sales
11:00 Transition into Lunch
11:30 European Close / Live Webinar in our Trade Room
Set your alarm clock 5 minutes before the news, and 5 minutes after the news we will enter the market again.
We have 2 very important news events at 830am this morning, so look for volume to increase after 830am and we will be looking to interpret the market’s reaction to these events and plan our trading accordingly.
Lets take a look at the charts today.
The dollar index traded lower on wednesday after the FOMC announcement, and we find our dollar index now trading in a narrow wedge pattern.
Wedge Pattern can be a little tricky to day trade. We need to avoid the middle of the wedge and focus on the price action at the highs and the lows.
We also know that a wedge pattern may often times take multiple tries to break, so we need to see where this dollar is headed.
We thought the FOMC accouncement would have cleared out this sloppy dollar market, but looks like the GDP news tomorrow may still be on the minds of the traders out there today.
We know that while the dollar is in the wedge pattern we have potential trouble on the horizon today, so beware.
I will be looking for the dollar to break this wedge for the best trading opportunities, and im going to watch the speed and the average true range (ATR) on the DX 03-11 for the best entries on the markets we trade most
Crude Oil Futures
Crude oil futures have left the bearish price channel and now complete its sideways trading range from 87.79 down to 86.00.
Sideways trading is really simple, Buy the lows, sell the highs, and avoid the middle
The key to this strategy is to remember to only buy at support and sell at resistance. sounds very easy, but harder to execute in the heat of the moment.
We have a falling dollar, so I would look for the long side as the safer side potentially today, so look for buying opportunities at support.
Buy at the lows of 86.00 if price drops back down. I will also buy at the break of resistance (turns to support) on the way higher.
Buying above trend lines (yellow) 86.77, avoid 87.00 (middle), and then above 87.39, 87.79, and 88.24. all the way up.
Im also going to keep an eye on the highs of this range. Look to sell the highs around 87.79 and 88.24 if price does make it higher. Im looking for momentum and speed to confirm whether or not the highs will break or hold, so pay close attention to those.
Gold is in a really interesting spot on this 34range chart today. Look at all the variables we can see with trend lines
- we can see a short term bullish price channel in blue
- we can see a long term bearish price channel in pink
- we can see a wide sideways range from 1352 down to 1322
lets take the most recent bullish price channel, we just broke the lows, so im looking to buy these lows first.
buying at SUPPORT levels are the most important thing to remember here, so keep it simple.
buying at 1331.5, 1324.5 if we drop more, and then looking to price to rise back up and take profit at the highs of the price channel around 1345.1
We’re also in the middle of this wide sideways range, which means we need to be careful trading in the middle of that range.
Look for the best trading opportunities on gold buying the lows of 1324.3, and selling the highs of 1347.5.
We have a double bottom at 1322 so this will make for a perfect buying opportunity for almost every type of trader today.
In the middle of this range (where we are right now) we can go either direction, so scalpers and day traders can sell the break of 1331.5 short, but swing traders will want to wait for the highs of the lows to be tested first.
Finally, if we do end up breaking new lows im going to stay away from selling the lows and will focus on selling a retracement after we clearly see new lows made and holding.
The euro is trading at the highs after the dollar index drops to new lows. the euro has one of the strongest Dollar Index Futures Correlations so we need to keep an eye on the dollar when trading the euro.
this choppy dollar moves the past 45 days have continued to keep the euro breaking new highs but filled with lots of Fake-out breakouts while we make these new highs.
with that said, keep an eye on buying pullbacks when this price rises, this will be the easier way to trade at the highs.
The biggest issue for the euro today will be overhead resistance. looking at this 34range chart we can see overhead MAJOR resistance at 1.3756 from late november 2010.
Im looking for overhead resistance at 3756, 3776 and 3800 to hold easily, so looking to sell the highs (resistance) today on the euro.
I will also buy at support levels such as 1.3629 if price drops off those lows.
Buy the lows, sell the highs, and avoid the middle is our motto on the euro today from 3800 down to 3600.
E-mini Russell Futures
No guidance today on russell
