January 19, 2011
- in Uncategorized by schooloftrade
Morning Prep Day Trading Crude Oil, Gold, Euro, Russell and Dollar Index Futures
Let’s begin our morning routine with the economic news for today’s trading session.
830am: December Housing Starts/ Canada Manufacturing Survey (crude oil)
*Watching crude oil futures at 830am for the news out of Canada (large producer of Crude Oil)*
I always begin my day with Dollar Index Futures
Our daily chart with continuous contract on the Dollar Index Futures shows that we have finally broken new lows.
We have been trading sideways on the dollar for weeks now, waiting for some more movement on the dollar, and it looks like today may be looking better.
I will use a much faster timeframe in our live trade room this morning to tell where the specific support and resistance levels are for us to look for.
Crude Oil Futures
We have 830 news out of Canada this morning that will most likely have an impact on crude oil futures, so we will keep an eye on volume before 900am.
Looking at the 34 range chart on crude oil we can see a tight wedge pattern developing around 92.80.
The highs of the wedge give us three scenarios to consider:
– The price drops from the highs
– Price breaks new highs
– Price goes sideways at the highs
Im looking to sell the highs first, looking for momentum to confirm with big sellers at the highs for a 2-step reversal pattern.
If price tries to break new highs im looking to buy a pullback above 92.80. I can see 94.00 overhead as a nice final target for today’s move if the CL traders can push new highs.
Remember, it can be tough to buy the highs, so be patient and wait for new highs to be made, then looking to buy a pullback using our Wave Pattern long.
If price trades sideways at the highs im going to have to be very careful. You can see we have a few different trend lines that make up the highs of this wedge.
The yellow trend lines are the major highs and lows along with the blue trend lines being minor. You can see we have some minor support below 92.80 that im going to watch closely when im looking to trade around these highs.
As always remember the basics of buying support as price is falling, and selling resistance as price is rising.
Gold has a similar price wedge as the crude oil, but we aren’t in the same spot within that pattern. Gold is in the middle of the wedge so we have three scenarios to consider:
– Price rises to the highs of the wedge
– Price stay in the middle of the wedge
– Price drops to the lows of the wedge
If price rises to the highs im looking to either sell the highs of the wedge around 1376.7 – 1377.8 (resistance) or buy levels of support with pullbacks if the buyers are in clear control.
I would expect gold trying to rise today considering the Dollar Index Futures Correlation
If price stays in the middle swing traders and long term day traders need to be careful, we always want to buy the lows and sell the highs of the wedge, so ONLY short term trades will play in the middle.
If you trade the middle remember to buy support and sell resistance, don’t just trade the patterns.
If price falls to the lows we will look to buy at support levels on the way down, looking to buy the lows of the wedge with a 2-step reversal pattern.
If the sellers are in clear control im looking to wait for support to break so I can sell a retracement on the way down.
Look for a nice open range for price to move between 1364 and 1356, selling short below 64 will have a nice big move down so I will be looking for ways to get into a short position there.
I will review all of this in our morning prep today
Euro futures continue to rise this morning to new highs on the dollar dropping. There is a strong correlation to the dollar so we will always watch the DX futures closely with the euro.
You can see major resistance overhead at 1.3500 which makes the top of this wedge pattern.
The euro has three options from here…
– Price rises to new highs
– Price trades sideways at these highs
– Price drops to previous lows
I will expect the dollar to fall, rising the euro, so im looking to buy levels of support on the way up.
We’ve already bounced off the trigger line at 3450, so the next level of support will be using the 1.3500 to buy a pullback.
If price stays flat at the highs the swing traders need to be careful. Short term day traders and scalpers can trade during sideways chop, but make sure you look for support to buy and resistance to sell.
If price falls we have lots of opportunities to buy and sell.
Im looking to sell below 3440 as price breaks support levels on the way down. Broken support turns into overhead resistance, so im always looking to sell a retracement of 3440, 3400, 3347, 3300 and so forth on the way down.
E-mini Russell Futures
