September 12, 2011
- in Uncategorized by schooloftrade
Price Wedges make for easy trade opportunities if we can stay patient
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The James’ Report: Professional Resources for Professional Traders
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Crude Oil chops around in the middle of a major price wedge 86.00
Gold Futures look very similar, right in the middle of the range, 1845
Euro climbing off last Friday’s Lows
Russell sits on major support, we look for double bottom or new lows
Global news…
– Markets seem to be setting up for an imminent Greek debt default
– Euro at decade lows against the JPY currency as it tested below 104
– Euro Zone banks paying Libor +125 for 3 month usd, which is a – 3 yr high
– European shares dropped after a worrying weekend over European debt woes. Rumors over a Greek default on the weekend magnified in the markets and it seems that Germany may be ready to pull the plug. German officials such as Schaeuble had already said months before that the Greek default was a scenario which was unlikely but for which Germany was prepared.
– ECB’s Wiedmann commented that he did not see any reason to follow Stark’s resignation and would continue to fight for price stability and defend ECB independence
– In the Independent, the London School of Economics reported that households in the developed nations have yet to experience the full impact to the 2008 crisis.
– The former British Chancellor Darling, speaking at the Mountains to Sea book festival in Ireland, warned that the Euro Zone on the brink. He criticized the ‘austerity first’ policies being promoted by officials in the EU. He warns this approach would prolong the economic crisis by years. If the EU economies fail to grow, then it will feed back into the banking system and could cause a complete disorderly breakdown of the EU.
– Ratings agency Moody’s commented on Spain noting that the regional government’s first half deficits are credit Negative. The high fiscal deficits of Spain’s autonomous regions in the first half of this year are credit negative, and reflect regional governments’ inability to curb spending aggressively enough.
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Today’s Economic News:
We do not have any major economic news this morning, so we will be watching the clock closely this morning.
This is the beginning of Quadruple Withing, which we will discuss in our live trade room this morning.
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Looking at the Charts:
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Our plan of attack on crude oil:
While we are inside Friday’s trading range we buy the lows and sell the highs of that range.
As price rises we are selling, and as price falls we are buying with an inside day.
As price falls I’m buying at support first, buying the PLOD from Friday 85.58, buying the lows of the wedge 85.00.
If we break news lows below 85.00 we will look for the fake-out breakout first because of the personality of a wedge.
If sellers are in control we then sell retracements below 85.00 down to 84.17 the next level of support.
Buying 84.17-84.00 as major support.
I want to avoid the OPEN and the middle of the narrow range around 86.00
As price rises im selling at resistance overhead at the highs of the wedge, the channel, and the highs of the ranges.
Selling 86.40, 86.61, 87.00, 87.44, 87.58 (major), 87.75, up to 89.50 the next major resistance level.
Sell wedge highs of 88.71-89.00 and also remember the PHOD is at 89.36 so look to sell those highs of the range.
34range chart on gold shows us three price structures:
· Inside day
· Price Wedge
· Sideways Range
All three of these price structures say the same things!
As price rises im selling at resistance levels, such as wedge highs, major resistance in blue boxes, 1851.5, 1852.4, 1858.8, 60.8, 63.7, 65.2, 70.5, etc. sell the resistance overhead.
We are expecting fake-out breakouts once we make new highs, so look for those first.
Avoid the middle of the wedge, avoid the OPEN 1850. And the BMTs at 1846.9.
As price falls I’m buying at support, buying the wedge lows, the PLOD, and the range lows.
Buying at 1837.3, 33.4, 30.0, 28.8, 25.5, 24.1, etc.
Russell Futures are showing us three price structures:
· Bear channel
· Price Wedge
· Inside day
As price rises im selling at resistance using the bear channel and inside day as my guide.
Selling 666.5, 72.8, 75.7 is major resistance, and use 78.5 as a great final target, but not as a location to enter b/c of the BMT at 678.5.
If price falls im avoiding the OPEN around 65.0 area.
Im selling retracements with new lower lows using the bear price channel.
I also need to be aware of the major support at 653.3 so selling as we make new lower lows, however, I will not sell into the lows of the price wedge around 53.3
If we break below 53.3 I’m first looking for the fake-out breakout using the price wedge.
Then if we see sellers are REALLY in charge, start selling retracements with new lower lows down to 643.7 or the bear channel lows. Both will be targets for your short trades.
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