August 16, 2011
Traders Prepare for Key news this morning while Crude Oil and the Euro tumble on growing demand concerns
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The James’ Report: Professional Resources for Professional Traders
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– Gold Futures rise this morning on fears of global slowdown
– Crude Oil Futures fails to break into the 90’s as traders bet on more slowdown for the global economy, meaning less demand for ‘black gold’
– Russell Futures pulling back to major support, giving buying opportunities
– Euro Futures can’t break the highs and tumble back down into its narrow trading range from previous weeks on weaker economic data from Germany.
Global News:
– German Q2 GDP was very disappointing
– Members of the German Chancellor Coalition partners have threatened to withdraw from the government if Eurobonds are agreed to
– Little difficulties in today’s Spain and Greek bill auctions
– ECB’s Liikanen commented that the global economic situation had moved in an alarming direction in recent weeks and now saw more economic uncertainty than before. He stressed that the ECB had acted decisively to ensure transmission of monetary policy
– India Economic Advisor Basu: Inflation might stay at current levels of 9.0% to 10% until end of 2011
– China government researcher: China shouldn’t hike rates in H2
– BOE’s King inflation letter reiterated that inflation was likely to rise to 5% in near term and then decline in 2012. The BOE Gov noted that CPI would be below 2% without VAT and energy effects.
– Reserve Bank of Australia released its August meeting minutes, saying that the case against rate hike was that global market uncertainty has increased and there are increased downside risks to demand.
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Today’s Economic News:
Looking at the news affecting day traders today we begin our day with 830am Housing Starts and Import/Export Prices here in the US. We then move to 915am Industrial Production, then to the 930am US Market Open. After the US Open we have to watch the clock closely for the transition into the lunch session. This is summer trading so we know the volume will start to drop after 1030am today so keep an eye on the 1030am Reversal Possibly being the beginning of the end of the morning session in the US. We do not expect a Golden Lunch today.
As always, we will read tape and volume to see when our day is over, and then we will take your questions and answer them all in our webinar.
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Looking at the Charts:
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Crude Oil Futures are trading at major resistance this morning after failing to break new highs above the 90.00 level. Traders are worried that slowdown in the global marketplace is leaving demand less each day, causing prices to drop.
Open your 89range chart and we see the major bearish price channel in green trend lines, and then the short term bull price channel in pink trend lines. You can see we are at the highs of both of these price structures.
In addition to the price channels, we can draw trend lines from swing highs and lows and find a minor bull price wedge.
I also see levels of resistance overhead and support below our current price of 86.50.
The key to trading this market this morning will be avoiding the buy-side around 88.00 because of this major resistance levels overhead. Bullish channel says to buy at support as price falls off the highs, and if we end up breaking the support we will then sell retracements to the next level of support where we will take profit, and then look to buy again.
Gold Futures are trading higher this morning after we saw lack-luster news from Europe on Monday. Traders are concerned with a falling US Dollar Index and Euro and they are buying gold to seek shelter from the storm.
Gold has broken the highs of a bearish price channel which gives us plenty of opportunities to trade today as price rises into resistance.
The best way to trade a day like this on Gold is to sell at these resistance levels as price rises. If we break through resistance I will then buy a pullback when it turns to support, taking profit at the next level of resistance and looking to sell it once again.
Remember that gold has been plagued by emotional/impulsive trading and price action, so dont be afraid to sit on those hands if you dont see gold acting right today.
Euro Futures once again have failed to break the range highs we have been using for weeks now. German news came out bearish for the Euro on Monday and the Euro dropped off the highs we saw as selling opportunities a day earlier.
We can see the price wedge, the sideways range, and the levels above as resistance, and below is support.
The key to trading a day like this on the Euro is to wait for price to rise up to the highs and sell the highs (exactly our plan from Monday) and if price falls we will buy the lows as support around 4143.
The hardest part of this is waiting for the highs or the lows, and not overtrading the middle. As you can see our attempts to sell the highs have been successful almost 100% of the time so far.
Russell Futures are pulling back to support, however we need to beware this area around the BMT. We can see two bullish price channels on this 89range chart. We can also see levels above and below us as support and resistance.
The key trading a market like this is to use the bull price channel as your guide first, buying pullbacks with new highs and buying at support as price falls to new lows.
If price rises im buying pullbacks above these levels of resistance, and if we fail to break new highs we then sell them as overhead resistance back down again. If price drops im buying at support first b/c of the bull channel, and then look to sell a retracement down to the next support level below us if we break the new lows. Remember to buy the channel lows as the highest percentage trade today.
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