July 15, 2011
- in Uncategorized by schooloftrade
Gold stalls at the highs while Crude Oil sits in transition on OPEX Friday
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Gold pushed to new highs earlier this week, and this morning we see gold stalling at the highs while investors take profit from these record-breaking price levels.
Crude Oil continues to get pushed lower this week on concerns over demand in the global marketplace. Recent news reports have confirmed slowing manufacturing reports, more jobless claims, and less retail sales giving crude its first losing week in the last three.
Looking at the news this morning we have quite a busy day
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| Today’s News |
Today is a summer Friday which means we need to manage the clock correctly. We aren’t going to get the early morning or late morning moves like we see in other times of the year. Today, Friday during the summer we expect to see moves begin after 830am news and then taper off before 11am est. We always remind ourselves that on any Friday we need to have a good reason to be trading after 11am.
Today is OPEX so we know that many traders will be taking the day off from the markets out of habit. We don’t usually shy away from OPEX trading, so we will trade right through it keeping an eye on the usual entry and exit rules to qualify a high percentage trade.
We also know that today will be the release of the Stress Tests from the ECB. These ‘tests’ will have a broad impact on the markets because we have all been walking on eggshells waiting for this debt crisis to be contained/resolved in Europe. The markets will be watching for this release today, so this will also be something weighing on the minds of cautious traders on this summer-Friday.
We begin the day with 830am news, Consumer Price Index and the Empire State Manufacturing Index. We also manufacturing news out of Canada at 830am which will affect crude oil and the CAD Futures.
Remember that we watch the Manufacturing reports for crude oil inventories next Wednesday, and CPI applies to Gold futures. This will hopefully give us some movement early this morning on a summertime Friday.
We then have 915am Industrial Production, another news event that should be a market-mover, followed by 955am Consumer Sentiment.
After the morning news our transition into lunch will be around 1030am on this summer Friday morning, watching for volume, speed, and personality changing as traders leave for the weekend.
Looking at the charts this morning…
The US Dollar Index is trading around the 89Range BMT on our slower timeframe this morning, giving us clues for the morning ahead. The BMT is always thought to be the end of the move, the center of the range, the area where we want to take profit, but never enter a trade.
The US dollar sitting on the BMT will always be a sign of sloppy markets, so be selective on days we see this on our 89range charts.
Looking at a faster timeframe on the US Dollar Index we can also see a slight bullish price channel, which also confirms our short term trend is slightly bullish, but mostly sideways in nature at this time. Sideways dollar means sideways crude oil, gold, euro, etc and this bullish tone gives us clues for lower prices today on the markets we trade most.
If the US Dollar continues to rise to new highs today we will be looking for selling opportunities on crude oil, gold, euro so keep the dollar index correlation in mind.
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| US Dollar (Slow) |
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| US Dollar (fast) |
Crude Oil futures are trading inside the range from Thursday in a price channel that will give us plenty of trading opportunities today.
You can see the PHOD above us as the major resistance, the PLOD as the major support, and we are trading just off the lows.
We need to avoid the middle of this range around the BMT 96.64, looking to sell the resistance levels of 98.00 up to 99.42 and buy the support levels around 95.00 down to 93.45. I will be looking to buy the lows of the range, the PLOD and the wedge lows as price falls, and the opposite at the highs of this range.
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| Crude Oil Futures |
Gold futures are transitioning this morning from a strong bull price channel into a narrow sideways range and a possible bear channel coming back down.
You can easily see the bull price channel on this chart below, but the harder part is seeing the new channel forming as the price stalled at the new all-time highs. We can see from the previous day’s trading range (PHOD-PLOD) that we are inside day this morning, but that may change.
It appears that Gold will be trading inside the range from Thursday, or into this bear price channel. If we stay within the range from Thursday then we sell the highs and buy the lows of the range, selling at 94.9 and buying 79.4. If we break to new highs I will be very cautious because those will be all-time highs. If we make new lows then we are in the bear channel so I’m selling retracements and selling at resistance as price rises back up.
The BMT is at 67.5 which will be a big price magnet for today, and with the tendency for gold to sell off this highs into this bear channel we should get the opportunity to sell today. I will either trade inside the range from Thursday or participate in the bear channel down.
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| Gold Futures |
Our live trade room is closed today, so there will be no live commentary. We will see everyone back in our live trade room on the 25th when we resume again.
Our Sales and Support Teams are working today and next week, and our entire team looks forward to working with you, answering questions and helping you get started in your trading.
