Trade the Weekend Gap | SchoolOfTrade Newsletter 11/14/16

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Notes for Tonight’s Newsletter:

Crude Oil is bullish and trading at the high of either a spike & channel or a spike & wedge this evening, which tells the buyers to be looking for opportunities to ‘buy low’ at the support levels at the low of the channel tomorrow.  The buyers have control, but they won’t want to buy this high, so their focus will be staying patient and trying to get in at a lower price around the correction zone tomorrow.  If the buyers don’t get the pullback then the other option is a breakout-pullback above the channel highs, and they will need to see strength through the highs and buy the pullback to the moving-average for a move up to the measured-move target waiting overhead.

E-Mini S&P is bullish and trading in the middle of a triangle (trading-range) this evening which means (pending any strong breakout) our plan will be to buy the low, sell the high, avoiding the middle of the range tomorrow.  The most recent test is coming off the lows, so we expect to see buyers finish their move up to the highs, where we expect to see sellers waiting to sell the highs and take it back down to the lows.  The most important thing tomorrow will be focusing our efforts on failure set-ups to sell high and buy low, while keeping an eye out of a strong breakout of the range which would tell us this multi-day range is trying to develop into a new trend.

Gold is bullish and trading in the middle of a range this evening which means our goal (pending any strong breakouts) will be to sell the high, buy the low, avoid the middle, and focus on failures until we see a new trend develop.  One important clue is the most recent move higher was very strong, and most strong moves will try to re-test the highs, if not make another symmetrical second leg higher.  With that said, sellers will be looking for another push higher and then watch for the failure and sell it back into the range.  Buyers on the other hand, will be looking for that next push higher to hold and complete a measured-move and possibly a re-test of the prior month low up at 1243.2.  If don’t get the move higher, buyers will still be looking for opportunities at the low of the range, they just need to wait for the sellers to try twice and then buy their failure going back into the range again.

Euro is bearish and trading in the middle of a spike & channel this evening, which means sellers will be waiting to sell the highs of the channel and a rising support trend-line may give the buyers an opportunity to run this price higher in the short-term.  The Euro made a strong move lower today, reaching a triple measured-move and barely missing the Double-Down target.  At this point, sellers will be looking for opportunities to ‘sell high’, rather than chase this move lower, so they will be looking for traps and buyer-failures at resistance levels overhead.  Don’t count the bulls out of this yet though, there is a ‘weekend gap’ that hasn’t been filled yet, and we don’t usually see those left open for more than a few days, so I won’t be shocked to see the sellers fail to stop the buyers as price rises and fill that gap sometime tomorrow.

FDAX is bearish and trading in the middle of a narrow range this evening which tells the bears to look for selling-opportunities at the resistance levels above the range and pending a strong enough breakout, they can sell below the range as well.  The buyers have a window of opportunity tomorrow as well after the weekend gap was filled this morning, now all the buyers should be included in this market and they can resume the move up to re-test the highs, the only thing they need is to see a strong break higher to prevent the sellers from keeping control and they can buy pullbacks above the ‘battle zone’ on the way back to the highs.