January 26, 2011
- in Uncategorized by schooloftrade
FOMC Day Trading Strategy Sell Retracements on Crude Oil, Gold, Euro and Russell Futures
820am EST
– We have FOMC day, so expect so early drop in volume before the usual times this morning
– Look for the lunch transition around 1045am est today, rather than later than 11am (FOMC DAY)
– We also have concerns over crude oil futures with major news at 1030am, so keep an eye on the personality of the crude oil contracts.
– Expect low volume and choppy price action before 1030 on the CL, and then look for the reaction to the news to give more movement and opportunity after we see the reaction to the 1030am news.
830am est
– The dollar index has jumped back off new lows into the sideways range above it, and this is exactly what we expected to see according to our morning prep.
– We don’t expect the dollar to be moving much ahead of FOMC, so when we see this breakout we are expecting the fake-out breakout.
– Watching the dollar rise now, we are looking for selling opportunities on the markets we trade.
– Pay close attention to the dollar speed of the tape and the average true range. These will be vital clues to when the market is in a position that WE want to trade.
– The atr on the dollar tells us we have more narrow price action (worse) today @ 830am more than it was yesterday at 830am est.
– This is no surprise with FOMC Day here today, but you can see what the effects are.
– Lower highs on the ATR tell me the market is transitioning into a more narrow trading range ahead of this important news.
– Increasing dollar speed is a MUST, so look for spikes in the speed on the pace of tape indicator for great opportunities to trade during this slow morning session we see thus far.
845am est
– We’re seeing VERY sluggish price action on all the markets this morning
– We have no speed on the gold, and even though we have 3 patterns so far, only 1 of them had any movement and that only went 10 ticks.
– Lack of speed is making these patterns more difficult to have confidence getting in, staying in the trade, and taking the correct profit target.
– Now that we know what the market personality is, we can begin to plan our attack.
– Our biggest concern is that the lack of movement will results in very small winning trades, and then only 1 loss can wipe out all the profit
– So ill look for double-confirmation
– Multiple timeframes on momentum lined up
– Speed increasing on the market im trading AND the dollar index
– Wait for LOTS of BIG MONEY, they will be the key today
915am est
– We took a big winner on the gold with only a 10 tick move using a wave pattern, and knowing that the market was most likely NOT going to give us any BIG MOVES this morning before the FOMC announcement we took our target quickly, not waiting for price to move anymore than expected.
– We also took a wave short on crude oil, placed our final target 5 ticks above the LOD, watched as the CL bounced 5 ticks above the LOD, we took our profit perfectly!
– So we got to know the market’s personality and the personality told us how to enter, manage, and exit these trades today
– We followed our rules based on the personality and we made money, and avoided additional risk.
– We learned 2 specific things about this slow day
o We need MORE to get into a trade (double confirmation)
o We need LESS to get out of a trade (take your profit and run, don’t wait for this market to chop around and take the money back)
945am est
– We have the crude oil futures trading at the lows of the sideways range
– We want to BUY the lows, and we see momentum on the slower timeframes oversold and ready to curl up, perfect for a long trade buying the lows.
– Use 2-step
