January 14, 2011
- in Uncategorized by schooloftrade
Morning Prep Day trading crude oil, gold, euro futures
Morning Prep Friday January 14 2011
We’ve had a great week, lets finish up by following our rules and executing with confidence.
Let’s begin our morning routine with the economic news for today’s trading session.
- 08:30 US Dec CPI, Dec CPI Core Index, Dec Advance Retail Sales
- 09:15 US Dec Industrial Production, Dec Capacity Utilization
- 09:55 US Jan prelim Univ of Michigan confidence
- 10:00 US Nov Business Inventories
As you can see we have a few very important news events today (Retail Sales, Industrial Production, Business Inventories) that we should be watching for.
I will avoid these events 5 minutes before the news and then wait 5 minutes after the news to begin trading again.
With the news identified, let’s take a look at the dollar index futures
The dollar index has dropped to the lows of the sideways trading range that we defined earlier in the month.
I can see two scenarios for the dollar today:
1. dollar creates new lower lows and keeps heading down
2. dollar holds at support and bounces back up off the lows
No matter which direction the dollar moves we will be ready for it.
If the dollar rises off the lows, I will look for selling opportunities on the markets we trade.
If the dollar breaks these lows we will look for buying opportunities at levels of support.
As always, keep an eye on the speed of the dollar, average true range of the dollar, and the price action will always give us clues as to what to expect for the day ahead….so listen closely.
Lets look at crude oil futures
Crude oil futures have been searching for direction this week, up and down, sideways and sluggish at these recent highs.
You can see that crude has tried to look for more buyers above 91.00 but the head and shoulders pattern above 91.00 shows us the failure of this attempt to push price up higher.
With this failed attempt to move higher, we can now expect to see price return back DOWN into the sideways range from previous trading days.
Im seeing a range from 91.00 down to 88.00 so look for price to trade in this range if we break below 91.00.
Im going to be looking for buying opportunities above 91.00 because the bulls will try to hold this price above 91.00
Looking for selling opportunities when we break below 91.00 because that will put us back in the range below us, and we will expect price to trade from high to low of that range below 91.000 if it gets down into the range from earlier this week.
Notice the price channel in blue…im expecting to see the attempt to test support of 91.00 and then expect to see price try to bounce up into the lows of the price channel.
I will always be looking to buy the lows of the price channel if we can get back up into the channel above 90.50 or so.
Buy the lows and sell the highs of the price channel, keep that in mind. J take profit at the highs of the channel if we get the buying opportunity at the lows.
Gold futures have also tumbled off the highs this morning
We can see the bullish price channel on gold has been broken and price dropped off recent swing highs of 1392.9.
With price dropping out of this channel, we can see its resting on support which is the low of the sideways trading range ive defined with the white box.
At the lows of the sideways range we have two main scenarios to consider:
1. im looking for buying opportunities at support
2. im looking for selling opportunities at resistance
So im going to buy the lows of this range at 1364 – 1366, looking for a reversal pattern on the faster timeframe charts.
I will also continue to look for buying opportunities as the price rises, looking for place to buy around 1369.9, 1372.0, and even 1377.8
And remember, I will buy when these levels become SUPPORT, so wait for the break to the upside above these levels first.
If gold continues to drop below 1364 I’m looking for selling opportunities at resistance, so wait for the break of new lows and sell a retracement below 1364.5
Look for price to go down as low as the yellow trend line at 1355.0, so im looking to sell the break of 1359.5 and take profit at the trend line acting as support for the larger wedge pattern on this 34 range chart.
Also keep in mind that I will always be looking for buying opportunities at support if this price keeps falling, so we can pretty much use any direction of this price movement today.
The Euro currency futures are at the highs of the trading range
We have two options for the euro at the highs, sell the highs or look for support to buy the pullback off the highs.
Im looking to buy support of 1.3300 and take profit back at the highs of this price wedge, look for the yellow trend line as well as the big round number of 1.3400 for an excellent place to take profit if you buy this pullback on the euro.
If the dollar drops more today look for this buying opportunity to be very high percentage.
The higher likelihood is the euro will keep dropping off these highs, giving us selling opportunities below 1.3300 look to cover this short trade at the trend line support around 1.3250.
Watch the dollar on this euro trade…if the dollar continues to rise off today’s low we will have excellent selling opportunites on the euro, just be sure to sell at levels of resistance and take profit at levels of support on the way down (trend lines, 1.3200, BMT 1.3147, and 1.3118)
The euro is very correlated to the dollar index, so the speed, volume, and atr of the dollar will greatly affect how the euro reacts today.
As always we will be reviewing this information in our live trade room today
