August 31, 2011
- in Uncategorized by schooloftrade
Double-Bottom & Price Wedge make easy clues day trading crude oil and gold futures
Today is Wednesday of the last week of the summer and we know we have two big things to watch today:
1. Volume early and late morning
2. Crude Oil Inventories at 1030am today
820am est
Crude Oil Futures are trading in a price wedge, bull channel, and sideways range on the slower timeframe 89range chart this morning.
We need to use the 34range to get a solid plan of attack:
Crude Oil gives us easy clues today:
Inside day tells us to trade INSIDE the range we are currently in.
Inside day tells me the opinion of value is the SAME from one day to the next.
If we break above or below the previous day’s range we then can assume the opinion of value has changed.
We buy the PLOD and we sell the PHOD on an inside day. We also look to sell at the next level of resistance and buy at the next level of support.
We do not expect to see many successful breakouts on an inside day, so look for the Fake-Out Breakout when price is inside the range from yesterday.
If price breaks above the PHOD we buy pullbacks, and if it breaks below the PLOD we sell retracements.
Price Wedge tells us a very specific market personality.
Lower highs and higher lows is called ‘consolidation’ and that occurs when the market participants are searching for clues for future direction.
In other words, a wedge pattern tells us the traders don’t see value higher or lower, so they are waiting for news, something to spark the next move.
We trade a wedge the same way we trade an inside day or a sideways range, sell the highs, buy the lows, and avoid the middle.
At some point there will be a potential breakout of the wedge.
We expect fake-out breakouts at the highs and the lows of the wedge, until we break above resistance overhead or support below the wedge.
I’m buying pullbacks when we break through overhead resistance and selling retracements when we break support below.
Sideways Ranges are another easy opportunity to use a very simple plan of attack.
We want to sell the highs, buy the lows, and avoid the middles of sideways ranges.
There are 3 Phases to every sideways range, and we need to be aware of these when we trade them.
As price falls I’m buying at support of the range, and as price rises I’m selling at resistance in the range. In the middle of the range I sit on my hands and wait for the highs or the lows to be tested.
If we break out of the sideways range we buy pullbacks with new higher highs, and we sell retracements with new lower lows.
Our plan of attack on crude oil this morning:
– Using the inside day, price wedge, and sideways ranges
– We will buy support 86.47/87.10/87.67
– We will sell resistance at 89.00/89.18/90.00
– We will avoid the middle of the range around OPEN 88.50
– If we break above the PHOD we buy pullbacks
– If we break below the PLOD we sell retracements
– If we break through resistance we can buy pullbacks because of the bull channel
– As price falls to support we want to buy as the higher % trade b/c of the bull channel
930am est
Gold Futures are giving us many clues this morning we can use for our trading.
Narrow Price Wedge
Price Wedge tells us a very specific market personality.
Lower highs and higher lows is called ‘consolidation’ and that occurs when the market participants are searching for clues for future direction.
In other words, a wedge pattern tells us the traders don’t see value higher or lower, so they are waiting for news, something to spark the next move.
We trade a wedge the same way we trade an inside day or a sideways range, sell the highs, buy the lows, and avoid the middle.
At some point there will be a potential breakout of the wedge.
We expect fake-out breakouts at the highs and the lows of the wedge, until we break above resistance overhead or support below the wedge.
Inside day tells us to trade INSIDE the range we are currently in.
Inside day tells me the opinion of value is the SAME from one day to the next.
If we break above or below the previous day’s range we then can assume the opinion of value has changed.
We buy the PLOD and we sell the PHOD on an inside day. We also look to sell at the next level of resistance and buy at the next level of support.
We do not expect to see many successful breakouts on an inside day, so look for the Fake-Out Breakout when price is inside the range from yesterday.
If price breaks above the PHOD we buy pullbacks, and if it breaks below the PLOD we sell retracements.
Im buying pullbacks when we break through overhead resistance and selling retracements when we break support below.
Sideways Ranges are another easy opportunity to use a very simple plan of attack.
We want to sell the highs, buy the lows, and avoid the middles of sideways ranges.
There are 3 Phases to every sideways range, and we need to be aware of these when we trade them.
As price falls I’m buying at support of the range, and as price rises I’m selling at resistance in the range. In the middle of the range I sit on my hands and wait for the highs or the lows to be tested.
If we break out of the sideways range we buy pullbacks with new higher highs, and we sell retracements with new lower lows.
Price Channels are very easy to trade using the directional bias of the channel.
Bull channel has higher highs and lower lows and you will buy pullbacks with new highs. Buy at support when price falls.
Remember, trying to buy the highs of a bull channel will always be difficult, especially if the market is slower, or low volume.
Bear Channel has lower highs and lower lows, and we want to sell retracements with new lowers, and sell at resistance when price rises.
Remember, trying to sell the lows of a bear channel will always be difficult, especially if the market is slower, or low volume.
The key to trading breakouts on a channel is to wait for the support below or the resistance overhead to be broken, and then look to buy a pullback with new higher highs and/or sell a retracements with new lower lows.
Our plan of attack on Gold:
– Buy the lows and sell the highs of the wedge
– Sell the PHOD as resistance
– Buy the PLOD as support
– Buy the lows and sell the highs of the range we are currently in (inside day & sideways range)
– Bear Channel tells me the higher percentage trades will be short today.
————————————————————————————————
