January 31, 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 Personal Income & Outlays
9:00 Crude Oil OPEN
9:30 US Market OPEN
9:45 Chicago PMI
11:00 Transition into Lunch
11:30 European Close / Live Webinar in our Trade Room
Looking at the news today we have 2 big events, 830am and 955am EST this morning. Looking further into the week we have Ben Bernanke speaking on thursday afternoon and we have NonFarm Payrolls on Friday morning.
As always, i will set my alarm 5 minutes before these news events and then wait 5 minutes after each event to see how the market reacts.
We will be Reading the Tape and watching speed after the numbers are released to give us a direction after the news.
Lets take a look at the charts we’re watching this morning.
The dollar index is trading in a wedge pattern this morning, which means price will be getting more narrow as the day progresses.
Combine this pattern with low Average True Range and slow Speed of the tape and we have a dangerous market on our hands.
We always want to buy the lows and sell the highs of the wedge, looking for the best moves to occcur after the breakout of the wedge.
This is the dollar index, so im not trading it, im watching its correlation. Use the highs and lows of this price wedge to make other markets begin to move with more volatility.
right now the dollar is in the middle of this wedge, so we will see the best price action when the dollar tests the highs or the lows, so lets be patient this morning.
Crude Oil Futures
Crude Oil made its big run up to new highs late last week on supply fears and now we have the market slowing down at the highs of 90.50 and creating this massive wedge pattern.
Wedge patterns are quite easy to trade, and this looks to be a very easy set of levels to define if the price drops.
Sell the highs of the wedge, and we can see a nice 2-step reversal pattern triggering below 89.21, with support levels of 88.37 and 87.65 on the way down.
these make greats spots for entering short or taking profit.
we have three main options right now on the crude oil:
1. The market goes sideways at these new highs
2. The market drops off these new highs
3. The market makes new highs
We have a sideways range from 90.36 down to 89.21, so buy the lows and sell the highs of this sideways range if we dont make any new highs or lows.
If the price rises to new highs im looking to buy a pullback above 90.36 and 90.87.
The higher likelihood will be for price to fall off these new highs, so look to sell at levels of resistance.
Sell at the highs of this range at 90.36, and then selling again at the break of support at 90.00, 89.59, 89.21, all the way down to the lows of this wedge around 85.55.
We have the gold futures in a strong bearish price channel, and we can see at the most recent price action we see a narrowing wedge.
So price are dropping with the channel, and we see consolidation with the price wedge.
I want to sell the highs and buy the lows of the channel AND the price wedge, and also look to avoid the middle.
It appears the best entry would be to sell the highs of the wedge and the channel around 1339.5
The lows of the channel around 1310 will be excellent buying opportunities, or if we sell the highs this will be an excellent spot to take profit.
1325.9 level is right in the middle and we can see that this will be likely a difficult area.
Look to take profit in the middle around 1325.9, but entries long or short may be more challenging (the middle)
You can also see a nice 34-range wave short pattern setting up, with momentum overbought, and getting into position.
Look for the short first this morning, and watch the speed and the average true range if the dollar doesn’t get moving.
No guidance this morning
E-mini Russell Futures
No guidance this morning
