Gold Breakout Day Trading Strategy when Dollar Index Drops

We always start with the dollar index futures and we can see the dollar has three reasons to be excited for the price action ahead of us:

– Price is trading above the highs and below the lows from Monday, we call this an OUTSIDE trading day and this usually means good things to come in the markets we trade.

– Seeing new highs and new lows, which always bring movement from other markets

– We see a strong downtrend, which will mean a bullish trend to the markets we trade

o Buy the lows on gold and crude oil
o Buy the breakout to new highs on the euro

– Looking at the dollar the best assumption is that we have a lot of DOWNSIDE potential to the dollar, which would mean possible UPSIDE potential on the markets we trade.

845am EST

– The dollar index made new lows and we bought the breakout on the gold futures.

– Gold futures are trading at their all time highs so we have a few different options:

o Buying the highs or the breakouts to the upside will be higher risk above the all time highs, look for the dollar confirmation and big money buyers

o Selling the highs will be the best option

o Buying the lows, or buying the bounce off support levels is a great way to trade this market, buying 29.6, 27.0, trend lines, etc.

900am EST

– We see a reversal pattern on the 13 range of gold futures and we look to sell the highs below 31.2 for the 2-step reversal, this is also a Fast Track Method trade.

– We hear warren buffet speaking about inflationary concerns on the news chatter this morning

o This could spark a drop in the dollar, spike in the gold and the euro very easily

915am EST

– we wait until 935am EST for the markets to trade through the US OPEN

– We see crude oil futures trading at the highs of the day and trading in a sideways range from 82.68 down to 81.27

– We also have lots of support and resistance levels inside of this trading range, so we have plenty of opportunity to buyt he lows and sell the highs.

945am EST

– The markets have begun to slow down after the US Open

– The only trade today is the breakout on gold for 20 ticks

– We see the Russell futures are trading in a bearish channel, which is counter-trend to the bigger trend of the 21-range chart

– We want to sell the highs of this channel and buy the lows

– Along the way we can buy support and sell the resistance.

– We also have a trend line as support which has caused the market to stall as it falls off the highs of the channel.

– Im a little frustrated with myself b/c the pattern was EASY to see on the 4-range chart for a nice 2-step reversal pattern, but I missed it!

1015am EST

– We have gold futures trading sideways in a narrow trading at the highs, and im looking for a short entry and a reversal pattern off these highs

– Entry short below 30.1 and we have profit targets at 28.8, 27.5, and then down to the previous HOD at 22.5 for the final ¼

– If e do breakout to the upside we have a Fast Track setting up above 33.8

o Use 10 tick stop and target for this low risk day trade opportunity.

1100am EST

– The crude oil futures are trading sideways at the new highs of 82.74 so we have a reversal pattern setting up below 82.50 for entry short.

– Profit target of 38, 29, and then all the way down to the lows of the trading range, and use the big round number as my final target, 82.00 (1/4)

1130am est

– The euro has two high percentage set-ups right now at these highs

o Wave long will trade with the trend and the entry requires the momentum to curl up from the oversold territory, also look for increasing speed.

o If we break below 3820 level we have a 2-step reversal pattern, with entry < 20 we have targets of 3807, 90, and then all the way down to the lows of the channel at 65 for the final target