June 28, 2011
Tape Reading and Saudi News made 250 ticks of profit look EASY
We see the 89range US Dollar is in the middle of the range and right on top of the BMT which will lead to slow and sloppy markets this morning.
Clue #1 today = dollar in the middle @ BMT
The 13range of the US Dollar Index is moving lower at 800am this morning, making new lows.
We need to use the 13range chart as our guide for day traders.
We can see lots of support levels below us, and we have three scenarios to consider with the dollar.
– Price drops and we then buy pullbacks and buy support on the markets we trade
– Price rises and we sell at resistance and sell retracements on the markets we trade
– Price may go sideways, so we trade the ranges we’re in, selling the highs, buying the lows, avoiding the middles, and avoiding the fake-out breakouts.
We will use the US Dollar as a strong correlation but we also know that the SPEED and the VOLUME and the FEAR in the commodity markets we trade may not have this correlation working today. We will read tape and see how it looks.
830am EST
Crude Oil makes new highs, but the speed slows down so badly that it makes it a very obvious fake-out breakout waiting for us to sell short.
**Crude Oil pushes above the PHOD, and above the 92.00 big round number and we look for sell the highs and sell the failure to make new highs. I’m looking to sell below 91.95 and then sell again below the PHOD 91.41.**
855am est
We are looking for wave patterns on the 13range, 21range on crude oil.
The idea of sellers pushing down into the range below us (where we started before the breakout) has us concerned that we may want to skip the wave long and look for the wave failure and go short.
930am est
We took three trades on crude oil, selling the channel highs and using 2step price reversal patterns on the way down.
We used the slower speed at the highs, and then used tape reading to see when the wave patterns were failing to enter short on crude oil.
It wasn’t too fast, it was sloppy, but we traded with precision and we didn’t put ourselves in any tough spots.
We review the crude oil futures and we see the following
– Strong bull price channel, we are at lows
– Narrow Price Wedge from earlier this week
– Outside day, above the PHOD , turned inside day below the PHOD 91.41
– BMT is at 91.15 in the middle
– Sideways ranges from 92.40 down to the PLOD 89.61
If price rises:
– Selling at resistance first, and then buying a pullback with new higher highs
– I do not buy at the highs
– Avoid the BMT 91.14 and the OPEN 90.90
– Avoid the middle of the price wedge 91.15
– Sell the PHOD as resistance, as well as the 34r trigger line at 91.36
– Sell the range highs of 91.46
– Sell range highs of 91.95
– Sell the HOD 92.19
– And sell the channel highs at same levels 92.19
– As you see new higher highs look to buy pullbacks
– Inside day = sell the highs, so trade carefully and avoid the fake-out breakouts.
1020am est
We see buyers fail at the highs another time today and we trade it short after trying to trade up into the highs.
Its very tough to tell WHO has control right now on crude oil, right in the middle and moving towards the highs but we are concerned this may be a sideways range so wait to buy the pullbacks on the way up to the HOD.
1030am est
News comes across our audio news feed and we hear that the Saudi’s are going to increase the supply of crude oil
Very strange…price rises! Why? Did we read it correctly? Was there something we missed?
“Let these buyers run out of gas at these new highs, and then lets sell short using the speed and tape reading to confirm when the sellers take over control and bring the price back down”
(price eventually tumbled and we took 3 winning trades from our knowledge of reading the news.)
1125am est
We’ve had an amazing day of trading so far, and now we wait for price to move faster with more volume after 1130am and the European Close.
My plan of attack on crude oil will be very simple, stay away from the middle, and look to buy the lows, sell the highs, and beware the fake-out breakout.
The 89range on crude oil shows us in the middle of the sideways range. This means we need to wait for the highs of 92.19 or the lows of 90.95 to be tested for the best trade opportunities.
We can sell below the PHOD, however, will be higher risk b/c of a few reasons:
– In the middle of the 89r range
– Oversold momentum
– Inconsistent speed and price action
– Selling into the lows of the channel (we buy the low)
If price falls on crude I’m buying the lows of the channel at 91.16 just beware the BMT at 91.18 will be very sloppy.
If prices rises on crude I will look to buy a pullback above 91.63 which will be wave 34 long.
1140am est
This feels like the ‘calm before the storm’ as we wait for the European close and the Golden lunch.
Nothing comes for volume at 1145am est so we call it a day, a GREAT DAY.
