December 8, 2010
- in Uncategorized by schooloftrade
day trading strategies for crude oil, gold, dollar index, russell and euro futures
Day trading morning prep for 12-08-10
Our live trade room is open for members and guests.
Lets begin our day with the economic news reports for today
Click here for today’s news
830 – Housing Starts
1030 – Crude Oil Inventories
1130 – Live Members Training
Now that we have the news for today, lets take a look at the dollar index to give us the correlation for the day ahead.
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We can see the dollar index has travelled from one extreme to the next in only 1 trading day.
This is exactly what we expected. Yesterday the dollar is at the lows of the price channel, and the goal is to get the price to the top of the channel, and you can see that was accomplished.
With that said, we’re now looking for a few scenarios at the highs of this price channel.
1. The market may sit here at the highs and go sideways
2. The market may keep going
3. The market may reverse and come back down
Using those 3 options as our guide, lets look at what the opportunities will be.
If we go sideways…expect to see a sideways day on the markets we trade most.
If the market keeps going above the top of this channel look for the markets we trade most to fall, so im looking for selling opportunities if the dollar keeps rising
If the price reverses and falls back down I will be looking for buying opportunities on the markets we trade.
IN closing, we use the correlation to the dollar to make educated decisions about whats coming up today.
Right now we need to wait and see what happens next. If we go sideways at these highs be ready for a higher risk trading day.
If we move up or back down look for another day filled with trading opportunities.
Lets see what happens, ill be trading it live in our trade room this morning @ 8am est.
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Look at gold tumble off the highs of the price channel from yesterday.
We had gold at the highs on Monday and Tuesday, and as expected, the market came off the highs of the price channel for nice selling opportunities on Tuesday.
Now here on Wednesday we can see a few options:
The market may go sideways from 1400 to 1391, and if that is the case we buy the lows and sell the highs of that narrow trading range.
Im expecting the gold price to drop all the way down to the trend line support at 1380
I will be looking at buying support levels on the way down.
As price comes off these highs on gold we will continue to see levels of support hold and give us chances to profit from ‘buying the bounce’ on the way down.
The highest percentage trades coming down off the highs will be selling the break of support, or selling the highs, so keep that in mind.
Look for gold to go sideways today or to continue dropping.
The dollar index will help tell the story, so we will wait and see.
Crude Oil Futures
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Crude oil and gold look very similar once again today. Crude oil was trading at the highs on Monday
and Tuesday and we profited in our trade room by selling those highs and buying at support on the way down.
Now we see price has come off the highs and back into the price channel.
87.65 is the bottom of the price channel, so I will be looking for buying opportunities at 86.74, 87.00, 87.14, 87.67, and 88.00
The key to trading a price channel is buying the lows, and keep an eye on the support level needed to be broken to violate this channel.
If we break below 86.74 expect the sellers to take control and we will be looking for shorts.
With that said, we need to assume this bullish price channel will be the most important aspect, so buy the lows and sell the highs of the channel.
Again, the dollar index will lead the way on this today. Falling USD will result in crude oil jumping back up to the highs of this trading range, so we will trade accordingly in our live trade room.
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The euro has reacted exactly as we wanted it to, making it easy to profit from this simple price pattern we can see on this slower timeframe.
We all know how to trade price channels, buy the lows and sell the highs
We bought the lows on the euro last Monday at 1.3100 and sold at the highs of 1.3300 for an easy swing trade for a few hundred ticks of profit.
Then we sold the highs of the channel late last week at 3350 and we’re taking profit on this swing trade short on the way down.
Now we can see breaking the bullish price channel and trading sideways at 1.3200.
The dollar index will tell us what to do next…
If the dollar falls today, expect this euro to test the top of this bearish price channel at 1.3300.
I will be looking to sell short at 1.3300 to add to our short position while this market is falling.
Remember, if the dollar goes sideways I will expect the euro to be a VERY rough day, so use that as your guide.
I want to see a MOVING DOLLAR to have a moving euro.
More to come on this in the trade room today as we read the tape and identify the control of price on the dollar.
E-Mini Russell
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The Russell is the only futures market that DID NOT tumble off the highs from late last week.
The certainly tells us that the mighty e-mini Russell is searching for answers at these highs.
The dollar has been dropping for a week (until Tuesday’s rally) so the equity index are overbought and trading artificially at their highs.
It looks like we have a few options on the Russell with its sideways trading range.
If the dollar goes sideways today expect the Russell to stay moving sideways.
Sideways markets are easy, buy the lows and sell the highs, so be patient for the price to TEST the lows or the highs before looking to execute a trade.
Don’t fall victim to fake-out breakouts, I would expect the Russell to trade sideways unless the dollar pushes it up or down, so again, we rely on the dollar to give us some feedback FIRST, and then we can make an educated decision on the direction of the Russell.
If we break new highs I will sell the highs or buy a pullback
If we break new lows I will buy the lows or sell a retracement.
Trading sideways ranges you always need to worry about fake-out price reversals at the highs or lows, so that is why we buy pullbacks and sell retracements instead of trying to predict the price breakout in the first place.
As always, I will review this in our live trade room today @ 8am est.
Our live trade room is open for members and guests.
