The WRONG Way to Day Trade Gold and Crude Oil Futures

830am est

– We begin our day looking at the dollar index

o Narrow trading range compared to Tuesday

o Trading above the range from Tuesday, we call this an outside trading day

o Looks like it may be flattening from the bullish trend we saw Monday and Tuesday

o Average true range is still falling, now giving us reason to believe the dollar will be reversing its direction and headed back down later this month.

o Slow speed on the tape tells us to wait for the dollar to break the highs and the lows in order for us to take the BEST opportunities to trade today.

– Crude Oil futures are trading right in the middle of the wedge pattern on the slower timeframe 34-range chart

o Middle of the wedge is NOT where we want to be trading, so we now know exactly where we need to wait for today

– Remember we have news @ 1030 for crude oil this morning, so expect a different personality into the news today

– We can see sideways choppy price action on the 4-range (fast timeframe) which further confirms our concerns for crude oil at this time until after the news

850am est

– Gold futures trading in a very important wedge pattern with major trend lines as support and resistance

o When major trend lines are the levels we need to expect these levels to hold, so play the highs and lows inside the wedge first, then look for the breakout.

– We also see a bearish channel, which will also come into play, but AFTER we deal with the wedge.

o If we were NOT inside the wedge right now I would trade the channel first, but we are inside the wedge, so the wedge comes first.

– We’re at the lows of the wedge, so I want to look for buying opportunities until we fully breakout to the bottom.

915am est

– We need to wait for the US market to OPEN and look for patterns after 935am est.

– The Euro futures are trading at the lows of the channel and the lows of the wedge so we need to look for buying opportunities.

1030am est

– Made a mental mistake at 1024am est

– Looking for a short trade on crude oil, and I failed to recognize two things

o News @ 1030

o Momentum was oversold ( I want to avoid trading SHORT with oversold momentum

o Being that close to the news anything could have happened.