March 21, 2011
- in Uncategorized by schooloftrade
Price Drops…Buyer first, Selling second day trading crude oil futures
800am est
– Crude oil shows a large wedge pattern on the 34range chart
– We have a massive sideways range from 104.14 down to 101.00
– We also have a narrow sideways range from 14014 down 103.25
– We’re at the highs of the range, the highs of the wedge, we want to sell the highs
– If we don’t see lower lows to give us a short entry, we may want to buy the new highs
– We don’t buy AT the highs, we wait to buy a pullback after we make NEW highs.
830am est
– Gold futures just broke the wedge pattern on the 34range and headed to new highs
– Short term bullish price channel on gold tells us to buy the lows and use this bullish trend as our guide
– We are above the trading range from Friday, this tells us to be buying as well
840am est
– The dollar index chart 34range shows a bearish price channel
– The dollar has plenty of room on this chart to drop to the lows of the channel
– As long as the DX is dropping we can buy pullback and buy breakouts on the markets we trade
– Watch closely for the dollar to bounce off the next level of support, we need to pay close attention.
905am est
– We’ve made sure to follow our morning routine
– We have confidence that we are aware of our surroundings today
– We know the dollar is dropping
– We know the crude oil is at the highs of the range
– We know the gold has just broken its wedge
– When times are this slow, this is the PERFECT time to be looking for trades.
– Lets think about if price rises or falls…
Crude Oil
– If price rises
o Buy a pullback above the HOD
o Beware the swing highs above the PHOD @ 104.42
o If price rises, im selling 104.42 first, then if price keeps rising, I will then buy a pullback above 104.42
o Buy pullbacks at support, such as the trend line in blue
o Sell the 105.00 first, and then buy a pullback above 105.00 if price keeps going.
o Watch the DX 06-11 to see if the support levels are holding.
o If the DX is bouncing UP off support, I need to beware buying on crude oil
– If price falls
o 103.25 is the low of the sideways range at the highs
o I will buy 103.25 first, and then look to sell a retracement below 103.25
o Don’t forget, the dollar is dropping, so we may need to wait for the DX to bounce off support and RISE again, so we can sell the highs on the crude oil
o I will buy 103.00 first, and then look to sell a retracement below 103.00
o Always keep in mind the BIG ROUND NUMBERS are ALWAYS higher risk
o 102.88 is the PLOD, which makes for an excellent level to buy
o Buy 102.88 first and then sell a retracement if we break new lows
o When we break the PLOD the sellers will start to come in much faster and look to sell a lot more.
o We then look to cover the shorts at 102.00, the lows of the wedge
o Buy the lows of the wedge at 102.00
o If price drops below 102.00 sell a retracements and then look to cover at 101.00 which is the low of the sideways trading range.
– Remember the old rules.
o As price rises I’m a seller first, buyer second, and as price falls I’m buying first and selling second.
920am est-
– We recall the week we’re trading right now as being a transitional week where anything can happen
– Last week was OPEX/Quad Witching
– This week is the week BEFORE the last week of the first quarter
– End of Q1 is when all the money managers are padding their numbers, trying to keep their jobs and find new clients
– Last week we had people waiting for OPEX
– This week we have people transitioning into the 2nd quarter
– Traders may be standing on the sidelines going into the end of the first quarter.
950amest
– We have 2 winning trades today
– Both of these trades came from our morning prep
– As price dropped on crude oil, we were waiting for buying opportunities at the 103.25 low and the PHOD
1000am est
– We see existing home sales come out lower than expected
– The dollar is sitting flat right now
– We look for the DX market to be our guide for listening to the reaction to the news
– Very little reaction from the dollar at 10am news
– This will also show little reaction to the markets we trade most
– Flat trigger lines on the DX 13-range = flat trigger lines on other markets
– These sideways range on the dollar = sideways range on other markets as well
– Dollar sideways = sell the highs and buy the lows on the markets we trade
1025amest
– We see a bullish price channel on crude oil and we are at the lows of this channel around 103.00
– Im going to wait and see where we go from here.
– If we break the lows < 103.00 (lows of the channel)
– , sell the break, we are selling the highs of the massive price wedge
– If the 103.00 lows hold, we are now in the bullish price channel, so look to buy the lows
1045am est
– We really need to beware now
– The speed is slowing down
– We see the RED Pace of Tape showing up more often on both markets we’re trading today
– Now its vital that we wait for the times when we see GREEN Pace of tape, or rising speed
– The dollar average true range has dropped, this tells us to beware
1130am est
– We watched as 1030am brought VERY different price action to the markets we trade
– The personality changed dramatically after 1030am
– We waited for 1130am EST (European close)
– No volume here to keep us trading
– We watched as crude oil tried to break the 50’s 3 times but failed
– We now have to assume either sellers are in control, or the market is too weak to be buying at this area
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