June 16, 2011
- in Uncategorized by schooloftrade
What a difference a DAY Makes; Easy Price Pattern for Crude Oil Profits
8:00AM est
US Dollar Index is trading in a major price wedge on the 89range and in a bullish price channel on the 13range chart this morning.
We want to pay attention to the overhead resistance on the dollar looking for when the price reverses and heads back down into the middle.
The strong bull price channel on the 13range is most important for day traders. This tells us to expect rising dollar and we then look to sell the markets we’re trading.
Using the dollar is simple:
– Dollar rises I’m selling at resistance
– Dollar trades sideways, I’m trading inside the range buy the lows and sell the highs (it did)
– Dollar falls I’m buying at support.
Review crude oil futures:
We are sharing volume between the 07-11 and the 08-11 contracts on crude oil.
We are watching for contract rollover, which happens every 30 days on crude oil, and it’s one of the only markets to ‘share’ volume from one front-month to the next.
This throws some concern into the mix for tomorrow, which is Quadruple Witching, which means tomorrow will be VERY low volume on crude oil after 1030am
Big drop from yesterday has the PHOD way above us, and traders would assume to have a pop back up to the range we were in yesterday.
The most important levels we can see are the price wedge, the sideways range, and the price channel.
Inside day today with the price inside the PHOD and PLOD, so we want to avoid the fake-out breakout (buy the lows and sell the highs)
The bearish price channel says to sell as the higher percentage trade. We also know the US Dollar Index is RISING, and that dollar correlation confirms the sell side SHOULD be the highest percentage trades today.
There’s two variables to the dollar correlation:
– Fear
– Low volume
My plan of attack on crude uses the bearish channel, the inside day, and the price structure (wedge, ranges) to trade with.
If price rises on crude oil:
– Selling resistance overhead first (inside day)
– If we then make new highs I will then cautiously trade long buying pullbacks
– I will sell 95.00, 95.08, 95.50, 95.75, 96.00
– Im selling the highs of the range, the highs of the wedge, and the highs of the price channel.
If price falls on crude oil:
– I’m buying at support first (inside day)
– If we make new lower lows I will cautiously sell retracements
– I will buy 94.35, 94.29,94.01, 93.01,
– If price falls I have major support from my CL ##-## chart (daily continuous) at 93.50
– We will buy the support or take our profit at that major level of support.
855am est
We took our first trade on the crude oil futures following our simple plan of attack, buy the lows and sell the highs of the trading range we’re in. (inside day)
945am est
There is a definite change in market personality after 930am this morning.
We need to be selective with our trades going into OPEX Friday.
We also not seeing as much BIG money on the tape as we did before 930am
This leads us to believe that the professional traders are sitting on hands or they already have their long weekend started.
1000am est
Looking to sell on crude when we break below 94.94 which is below the 34r trigger line, which has been the major support keeping the sellers from brining price down to 94.50.
1015am est
We took another few trades on crude oil, sold the highs of the wedge twice, the first trade was the big winner and the 2nd trade @ 1014am was very sloppy and told us we need to be more careful.
Do not sell with oversold, or buy with overbought, and remember this is an inside day, so sell the highs and buy the lows, avoid the fake-out breakouts.
1025am est
We have minor news @ 1030am, Nat Gas
We have a sideways range and a very sloppy personality on crude oil and gold this morning.
We’ve earned over 100 ticks of profit, including surviving 1 loss, and now we need to be very aware of our time and location of the day.
Our plan of attack on crude oil going into 1100am:
– We will be selective with the trades we take
– We will sell highs and buy lows, avoid the middles (inside day)
– If we see new highs or new lows we will be cautious to trade the breakouts. Look for the fake-out breakouts.
If price drops on crude oil:
– I’m buying at support first
– Buying at 94.63 will be higher risk b/c of the highs of the channel (pink)
– Buying 94.50 is much easier, without the extra resistance overhead.
– Buying support at 94.44, 94.29 and the PLOD will be the major support to buy at 94.01
– As price makes new lower lows below this support it then becomes resistance and we sell retracements with caution (inside day)
