January 11, 2011
- in Uncategorized by schooloftrade
Live Trade Room Notes 01-11-2011
Morning Prep for day trading futures contracts
Let’s start with the economic news for this morning
We have a quiet morning for news
10:00 wholesale inventories
We will also have a webinar today @ 1130am EST in our live trade room.
We have a lot of important news later this week, so keep an eye on Thursday and Friday news events.
Now that we have our news under control for the morning lets take a look at our charts.
Im going to start with the dollar index futures because of its strong correlation to our favorite futures markets.
You can see the dollar index is still trading in the same sideways range from Monday.
DX is at the top of the wedge pattern (yellow trend lines) and we can clearly see that support of 81.000 is going to tell us what to do next.
If we break below 81.000 look for the DX to drop to 80.755, but if this 81.000 level holds we can expect more sideways trading on the dollar index, which will mean sideways chop on the markets we trade.
I will expect the dollar to hold and bounce at 81.000 which will mean looking for price reversal patterns on the markets im trading today.
I will be watching the dollar all morning.
Lets take a look at crude oil futures now…
We had a great day on crude oil on Monday with very little price action, so we’re looking to continue this today again.
We can see crude oil futures trading in the same range from Monday, so lets take a look at two scenarios:
1. I will expect the high of this range to hold, so look to sell the highs of 90.00
2. the highs may get broken, and I will look for the breakout above 90.00
Lets get more specific with this…
Look to sell the highs of 90.00 with momentum pointing down, and use a simple 2-step price pattern for the reversal trade.
I’m going to be careful with this breakout above 90.00 because you can see the trend line overhead on this 34-range chart, which appears to be the guide right now.
We can tell this market is weak because the blue trend line is clearly holding price, so while that is happening we need to be careful buying into that trend line with a breakout trade.
Ill play a little more carefully, waiting for price to break above 90.00, and then reading tape ill wait to see if the trend line will hold or not.
If the trend line holds I’m going to sell the break back below 90.00.
If the trend line breaks I won’t risk buying the breakout, ill wait to buy a pullback, using the trend line and the 90.00 as support for my long trade.
The top of the price channel is at 93.00 so your long trade has a nice wide final target.
Lets move forward to gold futures…
Gold is also trading in a sideways range this morning, similar to that on Monday.
Hopefully the dollar index will move today and get this gold market heating up again. We make great profits when gold is moving, so we will be watching closely today.
Gold has two things to consider:
1. price channel, we are at the highs
2. sideways range, we are at the highs
(dollar is also at the lows of its range FYI)
At the highs we are always looking for two scenarios:
1. sell the highs with a 2-step reversal pattern
2. wait for the highs to be broken with a breakout, however, we will wait to buy a pullback which is much higher percentage trade.
Look to sell the highs of 1384.8, we have momentum pointing down, so this may happen soon. I will use the 13 and 4 range charts to see the pattern for this short trade.
If we see buyers holding these highs I will look for the long trade above 1386.8, keeping in mind that buying the highs are more dangerous, so I will always wait for the pullback AFTER the new highs are made.
How about the e-mini Russell futures, one of our favorites.
This won’t open until 930am EST so you are ready for it.
We have three things to consider on the TF:
1. wedge pattern (yellow trend lines), we are at the highs
2. sideways range (white box), we are at the highs
3. bullish price channel (green channel), we are in the middle
With that said, I want to sell the highs of a trading range, so that will be my first priority.
We are in the middle of the price channel, so keep that in mind for taking profit at the lows of the channel if we sell these highs of 794.0.
Look for a breakout buy opportunity above 794.2 with final target of the channel highs at 800.0.
I will be looking at the 13 and 4 range charts for opportunities to sell the highs first, then looking to buy the breakout 2nd.
The Euro futures market is also trading in the same sideways range from Monday.
As always, I will sell the highs and buy the lows of this range with simple 2-step reversal patterns.
Look to sell short at 1.3000 taking profits off at 2950 and all the way to the bottom of 1.2870.
Look to buy the lows of 1.2870 taking profit at 2900 and then again at the highs of the range at 1.3000.
