July 6, 2011
- in Uncategorized by schooloftrade
Rocky start, never give up on your trading day, here’s another example WHY
Our goal today is to find the highest percentage trades:
– Pattern
– Correct time
– Correct location
If we wait for the high % pattern, at the high % location, and then using our entry rules we can determine if this is a high % time of the day to take the trade.
Let’s remember that today is filled with news that is not typical for a Wednesday. The holiday on Monday we lost 1 day this week so many news reports are being pushed back to Thursday, and then Friday is NFP.
830am est
We have news out of Canada that may get crude oil moving this morning so lets be prepared.
The US Dollar Index gives us the first clue of the day, with the 89range BMT and we are in the middle of the range at the BMT.
When the US dollar index is in the middle at the BMT we get worried that the markets we trade will be very sloppy and searching for direction.
Need to be more selective with our trades this morning until we see something change with the US Dollar Index.
We get our 2nd clue of the day from the US dollar index, this time using the 13range chart to see the short term trend and what is happening RIGHT NOW on the dollar.
Day traders need the short term trend, not the long term trend to make intra-day trading decisions.
We see a strong bull trend channel on the 13range chart.
What does the dollar index tell us this morning:
– Be selective today, and be patient to see if the DX can get away from the 89r bmt @ 75.420
– Rising dollar = falling crude/gold/euro/Russell/etc so with new highs on the dollar we want to sell at resistance on the markets we trade most.
– We will watch closely to see if the dollar starts trading sideways. If we don’t make new highs, and don’t make new lows the markets we trade will follow suit, so we then avoid fake-out breakouts and buy the lows/sell the highs of the range we’re in
845am est
Rising Dollar = im looking to sell at the right locations (resistance)
Lets review our crude oil futures…
89range chart shows a price wedge above us, 100 is the price magnet.
We also see a strong bull price channel and the BMT at the lows of the channel.
With the US Dollar Index rising, we can sell all the way to the lows of the channel, taking profit at the BMT 95.35
Then look to buy the lows of the channel and the lows of the range as support, and we may have the dollar reversing and moving down by that point of the morning.
Now we use the faster 34range chart to plan our specific plan of attack.
– Inside day
– Bullish Price Channel (medium)
– Bearish Price channel (short term)
Our plan is to sell all the way down to the lows of the channel, and then buy that support, using the dollar correlation as our guide.
This is an inside day, so there is clue #3 which tells us to avoid the fake-out breakouts and buy the lows, sell the highs, beware the middles.
As price falls:
– Im selling retracements
– Im not selling at the lows
– Take profit at 95.35-95.45 BMT
– Buy the support levels of 95.27, 95.16, 94.35 PLOD.
As price rises:
– Im buying with pullbacks
– Never buying the highs
– Selling as price rises into resistance
– Selling 96.41 as resistance
– Buying above 96.41
– Selling 97.00 beware the big round number so try getting in away from the exact BRN.
– Avoid the OPEN 97.45
– Try to sell the PHOD as resistance, and then look to buy above the PHOD up to the HOD at 97.79
– Beware trading around the 98.00 NO TRADE ZONE>
915am est
We took our first two winning trades on crude oil this morning. We need to stay patient because crude oil is not showing a very consistent personality.
Lets review Gold Futures on the 34range chart
– At the range highs off the 89range 29.5
– Sell the highs of the range
– Strong bull price channel, sell the highs of the channel
– Outside day, so look to buy pullbacks or sell retracements.
If price rises:
– Im selling at resistance first, then buying pullbacks
935am est
We find a new bull price channel on crude oil.
The dollar is breaking its support.
If the dollar is falling, I want to buy pullbacks, buying at support on crude oil.
1015am est
Our last two trades were finally some big winners to really make some decent profit this morning.
Crude has been lacking follow-through all morning, making it hard to have the confidence to see a trade play out. We get +5 ticks and then we get -5 ticks so its hard to stay in the trade.
Our main focus right now is being selective and remembering that one of these scratches will be the BIG WINNER we’re waiting for.
The dollar index keeps holding at support, which means we should consider the short side the high percentage side.
Crude news @ 10am should have been bearish, so this should make for some good shorts later this morning.
1030am est
We now see a speed correlation with the dollar index and the gold/crude markets we trade most.
As the dollar picks up speed so does the crude, gold, euro and Russell.
Lets watch closely at the dollar speed and look for the times in the market to trade only when the dollar speed is increasing.
1045am est
Everything is slowing down dramatically ahead of the lunch session in the US.
We’ve hit our daily goal, made a bunch of easy profit
Our plan of attack on crude oil is simple with a bullish price channel and a sideways range.
Buy the lows and sell the highs of the range from 97.24 down to 95.88
The best patterns will come at the lows of the bull channel, just beware trading around the BMT 95.38
1100am est
The market’s personality is changing quickly, getting very slow, so be patient and wait for the speed you need to get the confident entries.
Lets put a plan together for the end of the morning:
Crude oil:
If prices rise im selling the channel highs and the resistance above the channel highs at 97.00 and 97.24
New highs above 97.24 I can buy a pullback, with the goal of testing the open and the PHOD at 97.45
I will then avoid trading around the open @ 97.45 but will use that as a final profit target.
If prices fall im buying support at the lows of the bull channel and the support levels below it from 96.45 down to 96.07 and 95.90 is the current low of day. Buy these support levels as price drops.
Gold Futures
Gold is trading at the highs of the range and the highs of the channel.
If prices keep rising I will sell the highs of 1530.5, 32.2, and sell major resistance at 33.6
As prices break through these levels of resistance, they become support, and then we can buy at that support with a pullback.
If prices fall we want to try and sell these highs from the slower timeframes.
I’m buying support levels first at 1525.1 and then once that support breaks we then can sell with a retracement.
Buying support at 23.3 trigger line on the 34range and then once we break below 23.3 we then have a big drop down to the PHOD at 1518.0 I would love to get short to test the PHOD.
