January 20, 2011
- in Uncategorized by schooloftrade
Morning Prep Day Trading Crude Oil, Gold, Euro and Russell Futures
Morning Prep Day Trading Crude Oil, Gold, Euro and Russell Futures
Let’s begin our morning routine with the economic news for today’s trading session.
8:30 Jobless Claims
10:00 Philly Fed Survey
10:00 Existing Home Sales
10:30 Nat Gas Report
11:00 Crude Oil Inventories
I will set my alarm 5 minutes before the news so we can prepare for the reaction from the market. I will then wait 5 minutes after the news before I begin looking for trades again.
We will review these events ahead of time in our live trade room.
Now lets look at the Dollar Index Futures
The dollar index is trading in the tight spot it got stuck in on Wednesday. We see the dollar trading below the price channel in green trend lines, and above the trend lines of support in yellow.
We anticipate 3 scenarios from the dollar:
– Dollar rises back up into the range above
– Dollar stay flat and sideways in this tight narrow range
– Dollar drops, breaking new lows
We use a specific Dollar Index Futures Correlation to plan our trades using the dollar, so keep an eye out for this during the trading day.
If the dollar drops through support I’m looking to buy support on gold and crude oil, etc.
If the dollar moves up back into the price channel I’m looking to sell at resistance levels as the price continues to push new lows on the markets we trade most.
And lastly, a big concern is that the dollar will stay sideways. Sideways dollar = sideways markets across the board, so if we continue to see slow dollar SPEED and Low Average true range we need to be extra careful and wait for the perfect price patterns on the markets we are trading.
Crude Oil Futures
We have important news today for crude oil @ 11:00 (Crude Oil Inventories) which may have a good or bad impact on price action for the majority of the morning.
We expect to see two sides to crude oil today
– Before the news @ 11am
– After the news @ 11am
The personality on crude oil will be very important to understand before we take a loss trading crude ahead of its news event today.
We can see plenty of opportunity day trading crude oil today with price at the lows of the sideways trading range.
I can see plenty of room for this price to DROP, but lets not forget our scenarios…
– Price may rise off the lows of the trading range
– Price may go sideways at the lows
– Price may drop and make new lows
Im going to expect the lows to HOLD on crude oil at first, so look to buy the lows (support)
We also may see crude oil sit sideways and get consolidated at these lows, so don’t force the trade long or short if we break new lows…be patient and wait to see the reaction from the market. We will know right away from reading the tape.
If the sellers are in control and we see large sellers at new lows im going to look for selling opportunities, but I wont sell the lows, I will wait to sell the retracement after making new lows.
I will review the three different ways we can trade this AFTER we see what the market personality looks like on crude this morning ahead of important news.
Gold is in a very similar situation to crude oil, except the gold does NOT have a news event today to worry about.
We see gold at the lows of the trading range, and with the strong Dollar Index Futures Correlation we will use the DX to tell us where this price will be headed.
At the lows we have three things to consider today:
– Price may rise off the lows
– Price may stay at the lows and consolidate
– Price may drop and make new lows
Im going to expect the lows to HOLD on gold at first, so look to buy the lows (support)
We also may see gold sit sideways and get consolidated at these lows, so don’t force the trade long or short if we break new lows…be patient and wait to see the reaction from the market. We will know right away from reading the tape.
If the sellers are in control and we see large sellers at new lows im going to look for selling opportunities, but I wont sell the lows, I will wait to sell the retracement after making new lows.
The euro appears to be taking its cue from the dollar this week. Flat and sideways, but making new highs, this is a mirror image of the dollar index, so watch the DX futures closely when trading the Euro.
Look for our DX Pattern on the Euro futures, more info in the Advanced Section of the Website.
We have three scenarios on the Euro:
– Push new highs
– Consolidate at the highs
– Drop off the highs
If the dollar keep dropping I will buy pullbacks at levels of support as the euro rises
If the dollar stay sideways I will expect to see the euro consolidate, which means I will stay away
If the dollar rise we will see the euro drop off these highs so im looking for 2-step reversal patterns on the faster timeframes (13, 8, 4range) or I will wait for support to be broken, and then sell a retracement using that broken support as resistance for a short trade.
As always im going to review all of this with you in our live trade room today
