Dollar Index Curve-ball, Tape Reading made profit on Gold and Crude Oil Futures

815am est

– The dollar index is trending UP this morning

o Wide trading range
o Speed is slow, but its still early

o Average true range is steady, not at the lows, but not at the highs, again, its still early, this will improve with 830am news.

o Lots of overhead resistance levels as the dollar is rising this morning.

o In anticipation for a good GDP reading, this dollar may be pricing in the news already today, so look for the reversal off the highs later today.

o Dollar rising = looking to sell resistance on the markets we trade.

 That can easily change if the dollar tests resistance and then begins to drop
 So keep an eye on the dollar as it rises.

825am est

– We’re preparing our charts for the 830am est GDP news

– We see the crude oil futures have lots of support at 80.44, so depending on the news release, if GDP comes out higher than expected, look to sell short below the 80.44

o Profit targets will be 80.00, 79.62, and then the lows of the price wedge (trend Line) at 79.00

o If GDP comes out lower than expected, the price will bounce back up into the range above us, and look to buy 80.44, buy 81.00 and take profit at the highs of the trading range at 82.00 and 83.00

840AM EST

– GDP came out higher than expected, but the dollar appears to have already priced that into the market

– Because of this the big drop this morning was likely due to speculation on the GDP release, rather than actual lack of demand.

– Now we wait for the markets to react to the news for the big move of the day.

900am est

– Gold market is sitting in the middle of the price wedge, and it appears that we’re waiting for the news release at 2pm EST (FOMC Meeting Mins)

– Best thing we can do on the gold futures is to wait for the price to test the highs or the lows of the price channel

o Sell the highs
o Buy the lows
o Avoid the middle

930am est

– The US market opens with slow speed, and the dollar pushing new highs

o Sell the highs on the gold futures, we’re at the top of the wedge
o Sell the crude oil, but we need to wait till we get below 80.68

1045am est

– The news came out at 1000am about the Ireland bailout

o Euro sells off as people dump their euros

o Gold rises as they find shelter from the storm in the euro

o The dollar rises as a natural negative correlation to the Euro

o The idea that the gold can rise, while the dollar is rising, is a little fundamentally challenging because we don’t see it very often.