Trade the Short Covering Rally
Gold, Euro, and Oil are all trading sideways this evening, which makes it easy for us to identify high-quality set-ups (and traps to avoid) on Wednesday…
But the real story of the day is the short-covering rally we saw on the E-Minis – which tell us where to find the best set-ups, and (most importantly) what to avoid tomorrow morning. Are you ready?
Crude Oil is Bearish, But Will It Last?
Crude Oil is bearish with a strong move lower after today’s API Report sent prices racing lower…
But look closely, and you can see we’re back to the low of a trading-range, telling me to respect the bearish momentum, but looking for buying opportunities using the “nested” failure pattern.
E-Mini S&P is Begging Me to Chase It!
E-Mini S&P is bullish with a wedge as it runs all the way back to the range from late May…
But the most important clue on this chart is this short-covering rally, which reminds us to stay patient and wait for the market to go sideways before looking for buy set-ups off the battle-zone tomorrow morning.
Nasdaq Wants Back to May’s Trading Range
Nasdaq is bullish with wide channel and short-covering rally running higher, which tells me to avoid the temptation to “chase” the move higher, staying patient and looking for buy set-ups after a deep pullback on Wednesday morning.
Gold is Bullish, But Watch Momentum!
Gold is bullish into a trading-range, telling me to buy the lows of the range using seller-failure set-ups…
The concern, however, is the momentum of the sellers as this market pulls back to the lows. I don’t want to buy into bearish momentum, so I’m looking for the nested failure set-up if we get the deep pullback I’m expecting on Wednesday.
Euro Buyers Waiting for the Measured Pullback
Euro is bullish into a triangle pattern, which tells us to look for buy set-ups below the range lows using seller-failures for a rally back to the high again.
I also need to anticipate the potential breakout when the triangle comes to an end, and since most of those breakouts will fail and go right back into the range again, I’m waiting for them so I can “fade” the breakout with a 2-Try seller-failure pattern.
“Success is not final; failure is not fatal: it is the courage to continue that counts.”
