September 1, 2011
- in Uncategorized by schooloftrade
Fake-Out Breakout was easy with these clues from Russell Futures
· Closed Friday ahead of the long weekend, re-open Tuesday Sept 6th, next Tuesday.
· Monday markets are closed for Labor Day Holiday.
· Support Team is on vacation today through Tuesday as well.
815am est
Crude oil trading at the highs of the major bullish price channel on the 89range chart.
We have clues from Crude Oil 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.
Im buying pullbacks when we break through overhead resistance and selling retracements when we break support below.
Price Channels are very easy to trade using the directional bias of the channel.
Bull channel has higher highs and higher 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 crude oil futures:
Inside day tells me to buy the lows and sell the highs of the range.
Selling PHOD 89.54, buy the PLOD 87.67m and buying pullbacks above the PHOD, and selling retracements below the PLOD.
Price Wedge tells me to buy the lows and sell the highs of the wedge. Buying 88.27, 88.15, 87.67 and selling 89.54, 89.25, 89.00 as the resistance.
Price wedge also reminds me to fade the breakouts, expect the fake-out breakouts.
Bull channel reminds me to be cautious trading long at the highs, and look to sell the highs of the channel.
We may see a bear channel, and if we can find it, we can use that as a guide to sell the highs of the bear channel.
We also know volume will be dropping early today.
Gold is incredibly similar to crude oil this morning.
Inside day tells us to buy the PLOD 1813.6, and sell the PHOD 1842.7.
If we break above the PHOD we buy pullbacks.
If we break below the PLOD we sell retracements.
Price Wedge also reminds me to sell the highs and buy the lows, avoid the middles.
Also looking to FADE the breakout, or looking for fake-out breakouts at the highs and lows.
Bull Channel reminds us that the higher percentage trade this morning will be buying the lows of the range, the wedge, and the channel.
Bull channel also tells us to buy support as price falls. So buying 1818.8, 17.3, 15.2, 13.6, and down as far as 1810.0
The OPEN and BMT are very close to each other so stay away from trades around the 1825-1826 because that is the middle of the range and the BMT/OPEN will be sloppy areas to trade.
BUY THE LOWS ON GOLD AS HIGH %
935am est
Russell Futures look very similar to the gold and crude oil this morning.
Price Wedge, Inside Day, Bull Channel all remind of the same strategy we talked about earlier on gold and crude oil.
If price drops im buying the support below us and the PLOD 717.8
If price goes below the PLOD I then sell retracements.
If price rises im selling the resistance overhead, selling the PHOD.738.0
If price breaks above the PHOD I then buy pullbacks.
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