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Day Trading Gold & Crude Oil With Narrow Sideways Trading Ranges
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815am est
– We’re watching the dollar index and we see the following
o Outside trading day (above)
o Wide trading range (good)
o Up-trend (expect to see trending markets)
o Upside potential to previous highs (short side potential on the markets we trade)
– The e-mini Russell trading sideways in the same trading range from last week, so we’ll look at that later after 935am est
– The Euro is testing new lows, so lets begin there…
– The euro currency futures are trapped in the sideways trading range from last week and we need to wait patiently for this market to either
o Test the highs / lows to trade inside the range
o Wait for the breakout and look to buy/sell the breakout
– We notice on the 13-range chart of the euro currency futures that we are trading at the lows of the bullish channel pattern
– Trading at the lows = buy the lows so we’re looking for a reversal pattern above 3900 to enter long buying these lows.
– We also know the dollar index has room to run to the upside, which means the euro most likely has room to run to the downside
– With that said we can also trade the break of the lows on the euro short below 3823, but im not afraid to buy the lows of 23 looking for the low of day to hold/bounce.
– Looking at the mini Russell futures and we see this market continues to trade in the middle of the sideways range, which we call the ‘chop zone’, and this area requires us to use a specific trading strategy
900am est
– Im trying to wait for the euro to trigger our first entry for the day, meanwhile our crude and gold markets are passing me by, so im going to look at gold and crude now for another entry
– Gold has just finished testing new lows, which means im looking for a buying opportunity on gold.
– Crude oil is in the same situation, we just saw the big drop, now im looking for the big jump back up.
1030am est
– The dollar pulls off the highs and the markets we trade are seeing a dramatic change in their personality.
– No longer are we making new highs and lows, we’re having a hard time seeing conviction in price movement.
1125am est
– We see the markets slowing down
– The dollar pace of tape is trading very slowly which means the other markets we trade will be higher risk going into the end of the morning session.
– With the dollar pushing to the new highs, im looking for the gold to make new lows
– We have some important things to consider on this gold trade:
o Average true is falling
o European close @ 1130am est, this will possibly bring the bigger volume and the move im waiting for.
o The market is completely flat
Sideways flat trigger lines on the charts
I see all of my trigger lines are the same price
o Center of the smaller range, and when we zoom out we are in the center of the larger range
o Adding all of this up, the ONLY thing that would cause me to get into a trade right now would be excessive speed and large orders, confirmed by the dollar.
– Lets review these markets for the rest of the day
– Gold futures trading sideways just off the lows of the day and directly after the big drop down off the highs from late last week.
– We have two options on the gold:
o I can buy the breakout above 44.4 looking for profit targets at 46.0, 52.5, and the final target of 57.5 at the highs of the trading range.
o We can also sell short below 1338.0 with targets of 36.4, 33.2, and then all the way down to the big level of support at 26.0 for the final ¼.
– Crude oil futures are trading at the lows after the big move down, so im looking to buy these lows
– Entry long will be with a 2-step long entry above 82.23 with profit targets of 32, 44, soft 72, and a hard 95 for the final target at the big round number.
– If we do break the lows below 81.26 im looking to buy the previous low of day at 81.00 looking to capitalize on the bounce off these multiple lows (LOD and PLOD)
– EURO Futures got a bumpy start but took off to the downside testing new lows after the 830am announcement from china this morning that made the dollar rise.
– I want to buy these lows, and specifically I want to get in long above the previous low of day above 1.3823.
– Profit targets will be the trend line overhead, 70, and then big round number of 1.3900 for the final ¼ of your position.
– If we cant break the highs I can also sell short below 3757 with profit target of 20, 05 (big round number) and final down to 80 for the final target at the double-bottoms (yellow lines)
