August 2, 2011
- in Uncategorized by schooloftrade
Range-bound markets made for easy profits selling highs and buying pullbacks
We have personal income/spending news at 830am and we expect this to be lower than previous weeks. (USD bearish, crude bearish, gold bullish)
The US Dollar Index is making new highs today, so we know selling gold, crude, euro and russell will be the higher percentage trades until the dollar changes its direction.
Remember the dollar correlation and the fact that the slowing economy is making for a positive correlation on markets such as crude and Russell.
Gold still has the negative correlation, so does the Euro.
Crude Oil Futures are trading in a bear channel. The key today will be using this bear channel as our guide. Selling at resistance if price rises up, and then selling new lower lows with retracements, keeping an eye on the key support levels as price targets and price reversal opportunities.
Gold Futures are flirting with all-time highs again this morning as concerns across the globe lead traders and long term investors to seek shelter from the storm. Gold trading at the highs is a very tough spot to trade, so my plan of attack will be to stay away from the 37.6 all-time highs and focus on buying at support levels as price falls off these highs. Buying Pullbacks will always be the most efficient way to trade rising prices, and on Gold this is very important to keep us away from the emotions involved with trading at the highs.
Look to buy 18.8, 12.1, 08.1, 05.7 and if possible buying 85.9, 83.6, 78.9 on the way down. The bullish trend and the fundamentals make buying pullbacks the higher percentage trades today.
Euro Futures are trading outside of the bull price channel, now moving towards major support inside of a new bear price channel. We’ve seen this price structure many times before and we know that the major bull channel tells us to buy at these major levels of support listed on this 89range chart.
You can see we’re at the lows of the short term bear channel, so looking for buying opportunities here at 4115, 4085, 3990, 3920, and 3815. Another high percentage trade will be selling the highs of this new bear channel below the 4300 area. Strategy today will be buying at this major support, but then looking for selling opportunities if the support is broken and we move lower.
840am est
Personal income/spending comes out as expected, a lower reading than last week.
Gold pushes new all-time highs (we try to keep our emotions out of it) and crude chops around in the middle of the channel.
Review crude oil this morning and we see the following:
· Bear price channel
· Price Wedges
· Inside day, above the PLOD at 93.42
· Narrow trading range, tells me the market may have explosive potential today to fill the range from yesterday…or…the market may be slow and sideways today. We will wait and see.
My plan of attack for crude oil:
· As price falls im buying at the major 89range support levels first, and then as support turns into resistance we then look to sell retracements.
· As price rises I’m looking to sell the highs of the bear channel, sell at resistance on the way up.
· As price rises the high percentage trades will be buying pullbacks and buying at the channel lows.
· If price rises up above the 95.45 we then enter from the lows into the price wedge, and then we expect to see price go from the bottom up to the top, so from 95.45 up to the 96.15 BMT and then up to 97.43 wedge highs.
915am est
We took three trades on crude oil as it broke new highs earning over 80 ticks of profit before the 930am open.
We saw the sellers fail at the highs so we bought a pullback, and then the buyers failed so we then sold the re-entry back down into the range (sell the highs of the range) and then when the sellers failed at 34r support we then bought the 21r wave pattern long using speed and big money buyers as our guide.
925am est
Crude Oil:
· If price rise im selling 94.65, HOD 94.91, and 95.00 highs of bear channel.
· If price falls im buying 93.75 LOD (trend line support) and 93.42 PLOD
Gold:
· If price rises to new all-time highs i cannot feel comfortable buying or selling at the all-time highs, price is too sloppy.
· If price falls then i start looking to buy at major support 27.4 trigger line, 18.8, 12.1, 08.1, 05.7
· The key today on Gold is NOT to let our emotions do the trading for us.
1000am est
No news for 10am today here in the US.
Everyone sitting on hands waiting for this debt vote later today.
Crude Oil has very little personality and we’ve made all our money trading around the range highs and lows in a very sloppy price action.
Its been hard to feel comfortable with the FT Method today b/c we’ve had to take trades with overbought momentum, or around the open, or when things happen just very quickly.
We took 5 trades for 4 winners and 1 scratch on the FT Method today. Great work!
