June 8, 2011
Dollar jumps on Bernanke’s Comments, Crude Oil’s Slump Continues, and Traders wait for Beige Book News later today
The Dollar Index jumped off its lows this morning on news from our Fed Chairman Ben Bernanke last night. In review of his speech many traders were surprised at his specific attention on Crude Oil Prices, Commodity Prices, and his specific point made about the Jobs in the US.
Ultimately Bernanke confirmed that the Fed is very much aware of the lagging jobs recovery, and that the Fed would not ease its efforts until that was solved (three cheers for that…but HOW may we ask?). He also touched on facts that we should have lower crude oil (and other commodity) prices in the near future, and that we will be finishing QE II with no mention of QE III. This left traders looking for more, but somewhat happy with the lack of ‘leading info’….they will be digging into the ‘Beige Book’ later today you can count on that!
Looking at today’s news, today is the big OPEC Meeting in Vienna, and the same traders watching the news conference last night are also watching for the beige book this afternoon at 2:00pm EST. We will also be watching Crude Oil closely today due to its Inventory Number due out at 10:30am EST. I will be focusing on the Three Phases of Crude Oil Inventories today when making decisions to enter the market.
Its difficult to say what the personality of the markets will be today. Gold has been dropping from record prices this week and is in a transitional area (see chart below) and Crude Oil has the OPEC meeting today along with major news later on today which may have day traders on the sidelines. Days like today remind us to be prepared for the best, prepare for the worst, and then let price come to YOU. Be selective in your trades until the market shows its personality for the day today, and I will be helping you determine that in our live trade room.
The Dollar Index popped up off the lows after the news from Bernanke made it sound like the EURO really shouldn’t be where it is, and that all we need is a technical sign from the 6E for it to tumble. With the Euro on the possible ‘ropes’ traders are left with Gold and the USD, and with Gold at all time highs basically the USD is an attractive option at the moment. The dollar is now trading in the middle of its trading range on the 89Range chart below.
With the dollar in the middle of its trading range we can rise or fall with ease, so think about the Dollar Index Correlation when making your trades this morning, I will be watching the DX closely to give me a clue to which DIRECTION I am looking for short term day trades this morning.
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| DX 06-11 89Range SchoolOfTrade.com |
Gold is trading in a very transitional area. You can see we have recently broken the bullish trend price channel, which has led to a sideways range of trading, and now we can see the beginning of a bearish trending channel. All signs point to ‘nobody knows’ in the short term on Gold. Professional traders do still believe the long term outlook is bullish on Gold for many reasons, but we are day traders so you can’t get too wrapped up in the daily chart (that’s another lesson for another day in our trainings) so we focus on our intra-day moves in our analysis.
I can easily mark up overhead resistance and support below us which will make for easy places to enter, take profit, and exit the market. Look to buy the lows and sell the highs of the ranges on the 89range chart below, keeping an eye on the Dollar Index correlation for clues to which side of the market is the best side as the day develops.
| GC 08-11 89Range SchoolOfTrade.com |
And finally we cant forget about the Black Gold, Crude Oil. Similar to Gold, Crude is trading in a bear price channel, but with a very clear sideways range, and looking MUCH sloppier than Gold as you can see on the chart below.
Crude Oil has some concerns over OPEC today, Inventories at 1030am today, and the personality that will follow is a big question mark. Will OPEC make comments that send traders looking higher or lower? Maybe they don’t get anything of confidence and we stay sideways…its tough to tell.
| CL 07-11 89Range SchoolOfTrade.com |
One thing is for certain. I will make my highs, my lows, support and resistance, and then wait for the price action to confirm clues of the market’s intentions. I will be reading tape around major turning points, looking for confirmation of what the market wants to do. The entire world expects Crude to fall on lack of demand, excessive supply, and the cost of doing business in most manufacturing sectors…however, this is the biggest reason why we need to be selective with our trades today, not selling the lows, waiting for the proper entries on a retracement, and looking to short on price reversals off overhead resistance.
Ill show you what im looking at more specifically in our live trade room today
