Buy Pullbacks and sell at resistance on crude oil and gold futures

800am EST

We have the gold futures in a strong bearish price channel, and we can see at the most recent price action we see a narrowing wedge.

So price are dropping with the channel, and we see consolidation with the price wedge.

I want to sell the highs and buy the lows of the channel AND the price wedge, and also look to avoid the middle.

It appears the best entry would be to sell the highs of the wedge and the channel around 1339.5

The lows of the channel around 1310 will be excellent buying opportunities, or if we sell the highs this will be an excellent spot to take profit.

1325.9 level is right in the middle and we can see that this will be likely a difficult area.

Look to take profit in the middle around 1325.9, but entries long or short may be more challenging (the middle)

You can also see a nice 34-range wave short pattern setting up, with momentum overbought, and getting into position.

Look for the short first this morning, and watch the speed and the average true range if the dollar doesn’t get moving.

825am est

-          The dollar index trading in a narrow wedge pattern

-          The average true range on the dollar shows higher lows into this morning’s price action, this is a good sign of things to come.

-          We still want to see new higher highs on the dollar ATR, but this will be a good start.

-          Speed of the dollar looks pretty slow for this early in the morning session, but this can change really quickly.

-          Lets look for the dollar reaction after the 830am news this morning.

-          If the dollar goes nowhere after 830am we know more about the market’s personality.

-          If the dollar starts moving after 830am we know to begin looking for patterns and trade entries.

830am est

-          We’re looking at the vital signs of the gold and crude oil futures ahead of the news this morning.

-          The gold SPEED is very slow on the pace of tape indicator, we need speed to be increasing for a trade entry.

-          The average true range on the gold 04-11 contract is rising off the lows, this is encouraging because rising ATR = wider ranges = wider targets = more profit.

-          Crude oil average true is very similar, rising to new highs, not there yet, but looking good with higher lows from late last week.

-          Speed has been decreasing since 815am this morning on the crude oil, which tells us this market may be either waiting for the 900am open of the crude pit, or the news at 945am, or possibly for the dollar to react.

840am est

-          We saw no movement after the 830am news

-          The dollar drops a little, but not much

-          The crude oil is surprisingly sluggish even after 830am CAD news came out

-          And the gold speed continues to be sluggish

-          We had a few chances to sell the highs of the price ranges this morning, but the speed on a Monday morning can be a little less than desirable.

-          The gold 34range chart shows us a WEAK market because it cant break support and it gets held at resistance.

-          This WEAK market now tells us what to do with our trading

-          Look for more confirmation

-          Look for an easy level of support and resistance to take profit

-          Don’t get greedy, take your money and run!

Drawing trend lines:

910am est

-          We’re looking for more speed!  Please!!

-          We had 2 patterns on gold but the weak market has the gold troubled breaking new lows or moving off the lows for a price reversal.

-          The crude oil market is even slower.

-          We see flat trigger lines, sideways price range from 90.00 down to 89.21

-          Speed is very slow, and we don’t have the dollar moving.

-          The dollar is our main focus this time of the day (or when we have nothing moving)

915am est

-          We took our first trade on the 13range on crude oil with a wave pattern short.

-          The market broke to the downside, did not make new lows, but gave us a steep slope to our trigger line, and we saw momentum turn over with lots of big sellers so we took the trade.

-          The

950am est

-          We’ve taken three trades today for about 60 ticks of profit or $600usd on 4 contracts.

-          We add another trend line to the 34range crude oil chart to make sure we identify the most recent price wedge.

-          Buy the lows and sell the highs of the price wedge.

Wedge pattern: 

1000am est

-          We took another gold wave long and the price went +5 and -5 for a scratch trade.

-          The gold market appears to continue its sluggish and lack of direction movement.

-          We also took a trade wave short on the crude oil futures and saw very similar price action.

-          We got our 2 targets filled, but then the crude oil slowed down, momentum went oversold so we tightened our stop and got bounced out for another small winner.

-          Once again, we have NOT seen anything yet from the dollar, so we are expecting things to remain quiet until the dollar starts to move.

1015am est

-          We are now in the DEAD ZONE, which is the time after the last news event of the morning and before the 1130am European close.

-          No news = no catalyst

-          European close = more volume and more opportunities.

-          WE have some free time with the patterns setting up that we have to wait for

-          While we wait lets check ALL my timeframes to make sure we’re ready for the market when it comes to us.

-          Gold futures are looking VERY concerning on the 34 range chart.

-          We draw more trend lines and we notice the price is in the middle of the range and with trend lines above and below its no wonder why this market is having trouble moving.

-          Look for WIDE OPEN SPACES on the chart….thats where I want to wait for price to go to.

-          I want to define where MY TRADE will be, and then wait for the price to come to me.

1035am est

-          The dollar is at the lows and has momentum curled up from oversold

-          We sold the highs on the crude oil with the dollar looking to rise off the lows for another winning trade.

-          We’ve earned 150 ticks by 1030am this morning so its up to US to keep this money now.

-          Watch the dollar now, is it rising off these lows?  Or is it breaking new lows?

-          Dollar rise = everything falls

-          Dollar falls = everything rise

1135am est

-          We waited to see the European close @ 1130am and looked for a few more patterns, but nothing to trade b/c we cant tell who is in control of the price.

-          We want to sell the highs on crude oil, but we have trigger line support in the form of a wave pattern long.

-          After the euro close we wrap things up with notes, questions, and prep for tomorrow.

How to Draw and How to use Trend Lines for Day Trading any futures market

-          Trend Lines: draw them, use them, etc

-          Morning routine goes over it all, so log into the beginner’s course and watch the video on the morning routine.

o    Draw:

o    Open my slow timeframe first (daily, 34-range, 30-minute)(major)

o    Find the highs and find the lows

o    Move closer to the most recent price and draw more trend lines (minor)

o    Look for sideways ranges, wedge patterns, price channels.

o    Once you have this completed on your SLOW chart, then apply the same technique to the fast charts.

o    USE:

§  Entry: avoid trading around trend lines

§  Exit & Profit targets:  we take profit ahead of the trend lines, do NOT wait for the trend to be tested.

§  Market Sentiment: is speed rising or falling into a trend line?

§  Example:  we are long, and we see big money BUYERS at the trend line acting as resistance, increasing speed and big money tells us that the buyers are in control over price.

§  On the opposite side, if we see SLOWING speed and big SELLERS at the trend line we now know more about what to do next.

  

-          Different contracts = different trade management

-          1-contract trading is very simple

-          3 contracts

-          Watch the video in the advanced course

-          Use the notes along with the videos

          

-          MACD CROSS

-          Its not the most important item to watch on the TMC, the most important is the background color, are we above/below the zero line?

         

-          Explain our profit and trade management (How do we make our money)

        

-          Different chart types:  minute vs range

-          Range charts are better because:

o    They all have the same size candlestick

o    Easier to learn the patterns

o    Easier to recognize the patterns

o    Easier to plan your stops (all the candles are the same size)

o    They don’t move unless the market moves with more range.

        

-          How do you know then the big money is running stops?

o    Stops get run during low volume times of the day

o    Stops get run over lunch, overnight, early in the AM

o    There isn’t enough to keep the big traders from pushing the price up the HOD, just barely breaking the HOD enough to run the stops, with the sole intention on sending the price right back down.

-          What is the plan of attack as a new member:

-          Beginner’s Course

-          Advanced Course:  Quick Start Guide set up your charts

-          Learn the Fast Track Method and begin on your demo.

-          I do want you to learn it all, so watch all the videos and don’t jump ahead.

-          How did I get started?

Day Trading Morning Prep Gold, Crude Oil, Dollar Index, Euro, E-mini Russell Futures

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Let’s begin our morning routine with the economic news for today’s trading session.

8:20 Gold & Currencies OPEN

8:30 Personal Income & Outlays

9:00 Crude Oil OPEN

9:30 US Market OPEN

9:45 Chicago PMI

10:30 E-mini Reversal

11:00 Transition into Lunch

11:30 European Close / Live Webinar in our Trade Room

Looking at the news today we have 2 big events, 830am and 955am EST this morning.  Looking further into the week we have Ben Bernanke speaking on thursday afternoon and we have NonFarm Payrolls on Friday morning.

As always, i will set my alarm 5 minutes before these news events and then wait 5 minutes after each event to see how the market reacts.

We will be  Reading the Tape and watching  speed after the numbers are released to give us a direction after the news.

Lets take a look at the charts we're watching this morning.

 

 Dollar Index Futures

The dollar index is trading in a wedge pattern this morning, which means price will be getting more narrow as the day progresses.

Combine this pattern with low Average True Range and slow Speed of the tape and we have a dangerous market on our hands.

We always want to buy the lows and sell the highs of the wedge, looking for the best moves to occcur after the breakout of the wedge.

This is the dollar index, so im not trading it, im watching its correlation.  Use the highs and lows of this price wedge to make other markets begin to move with more volatility.

right now the dollar is in the middle of this wedge, so we will see the best price action when the dollar tests the highs or the lows, so lets be patient this morning.

 Crude Oil Futures

Crude Oil made its big run up to new highs late last week on supply fears and now we have the market slowing down at the highs of 90.50 and creating this massive wedge pattern.

Wedge patterns are quite easy to trade, and this looks to be a very easy set of levels to define if the price drops.

Sell the highs of the wedge, and we can see a nice 2-step reversal pattern triggering below 89.21, with support levels of 88.37 and 87.65 on the way down.

these make greats spots for entering short or taking profit.

we have three main options right now on the crude oil:

1.  The market goes sideways at these new highs

2.  The market drops off these new highs

3.  The market makes new highs

We have a sideways range from 90.36 down to 89.21, so buy the lows and sell the highs of this sideways range if we dont make any new highs or lows.

If the price rises to new highs im looking to buy a pullback above 90.36 and 90.87.

The higher likelihood will be for price to fall off these new highs, so look to sell at levels of resistance.

Sell at the highs of this range at 90.36, and then selling again at the break of support at 90.00, 89.59, 89.21, all the way down to the lows of this wedge around 85.55.

 Gold Futures

We have the gold futures in a strong bearish price channel, and we can see at the most recent price action we see a narrowing wedge.

So price are dropping with the channel, and we see consolidation with the price wedge.

I want to sell the highs and buy the lows of the channel AND the price wedge, and also look to avoid the middle.

It appears the best entry would be to sell the highs of the wedge and the channel around 1339.5

The lows of the channel around 1310 will be excellent buying opportunities, or if we sell the highs this will be an excellent spot to take profit.

1325.9 level is right in the middle and we can see that this will be likely a difficult area.

Look to take profit in the middle around 1325.9, but entries long or short may be more challenging (the middle)

You can also see a nice 34-range wave short pattern setting up, with momentum overbought, and getting into position.

Look for the short first this morning, and watch the speed and the average true range if the dollar doesn’t get moving.

Euro Currency Futures

No guidance this morning

 E-mini Russell Futures

No guidance this morning

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Chicago PMI

-The Institute of Supply Management - Chicago compiles a survey and a composite diffusion index of business conditions in the Chicago area. The survey is conducted by Kingsbury International, LTD. Manufacturing and non-manufacturing firms are both surveyed. Hence, it is not directly comparable to pure manufacturing surveys. Readings above 50 percent indicate an expanding business sector.-

The official name of this report is ISM - Chicago although it is commonly referred to as the Chicago PMI. ISM stands for Institute for Supply Management while PMI is shorthand for purchasing managers' index. The traditional name goes back to the years when the ISM was called the National Association of Purchasing Management. Investors should track economic data like the Chicago PMI to understand the economic backdrop for the various markets. The stock market likes to see healthy economic growth because that translates to higher corporate profits. The bond market prefers a moderate growth environment that won't generate inflationary pressures. The Chicago PMI gives a detailed look at the Chicago region's manufacturing and non-manufacturing sectors. Many market players don't realize that non-manufacturing activity is covered in this index and tend to focus on the manufacturing side only. On its own, it can be viewed as a regional indicator of general business activity. Some of the Chicago PMI's sub-indexes also provide insight on commodity prices and other clues on inflation. One should be aware that Kingsbury International, LTD releases the monthly report to those with private subscriptions three minutes prior to release to the media. This may account for occasional market activity just prior to public release. This survey is somewhat local in nature - reflecting overall economic activity in the Chicago area. But many see the Chicago PMI as being representative of the overall economy. Markets focus on the overall index - the Business Barometer which many refer to as the Chicago PMI. The breakeven point for the index is 50. Readings above 50 indicate positive growth while numbers below 50 indicate contraction. The farther the reading is from 50, the more rapid the pace of growth or decline. Frequency Monthly Source Kingsbury International, LTD and Institute for Supply Management - Chicago Availability Last business day of the month Coverage Data are for the current month. Data for June are released in June.

Personal Income and Outlays

-Personal income represents the income that households receive from all sources including wages and salaries, fringe benefits such as employer contributions of private pension plans, proprietors' income, income from rent, dividends and interest and transfer payments such as Social Security and unemployment compensation. Personal contributions for social insurance are subtracted from personal income. Personal consumption expenditures are the major portion of personal outlays, which also include personal interest payments and transfer payments. Personal consumption expenditures are divided into durable goods, nondurable goods and services. These figures are the monthly analogues to the quarterly consumption expenditures in the GDP report, available in nominal and real (inflation-adjusted) dollars. Economic performance is more appropriately measured after the effects of inflation are removed. Each month, the Bureau of Economic Analysis also compiles the personal consumption expenditure price index, also known as the PCE price index. This inflation index measures a basket of goods and services that is updated annually in contrast to the CPI, which measures a fixed basket.-

The income and outlays data are another handy way to gauge the strength of the consumer sector in this economy and where it is headed. Income gives households the power to spend and/or save. Spending greases the wheels of the economy and keeps it growing. Savings are often invested in the financial markets and can drive up the prices of stocks and bonds. Even if savings simply go into a bank account, part of those funds typically is used by the bank for lending and therefore contributes to economic activity. In the past twenty years, the personal saving rate has diminished rapidly as consumers have spent a greater and greater share of their income. But that has reversed in part during the recession that began in 2008 as consumers have cut back on credit card use and have been rebuilding retirement accounts. The consumption (outlays) part of this report is even more directly tied to the economy, which we know usually dictates how the markets perform. Consumer spending accounts for more than two-thirds of the economy, so if you know what consumers are up to, you'll have a pretty good handle on where the economy is headed. Investors can see how consumers are directing their spending, whether they are buying durable goods, nondurable goods or services. Needless to say, that's a big advantage for investors who determine which companies' shares they will buy. Importance Income is the major determinant of spending -- U.S. consumers spend roughly 95 cents of each new dollar. Consumer spending accounts directly for more than two-thirds of overall economic activity and indirectly influences capital spending, inventory investment and imports. Interpretation Increases (decreases) in income and consumption cause bond prices to fall (rally). As long as spending isn't inflationary, the stock market benefits because greater spending spurs corporate profits. Financial market participants pay somewhat less attention to personal consumption expenditures than to retail sales, which are released earlier in the month. However, they do closely monitor personal income and the PCE deflator. Changes in personal income signal changes in consumer spending. For instance, a period of rapid income growth may signal future gains in personal consumption expenditures as well. Conversely, a period of declining income growth could signal an impending recession. While consumers often still must purchase necessities, discretionary purchases may decline, or moderate. Consumers are more likely to increase spending when they see their stock portfolios increase in tandem with the stock market. When the stock market falls, spending is likely to decline because consumers feel less wealthy. Home prices and home equity have similar effects. Rising home prices boost the amount of equity consumers have in their homes. This allows access to Home Equity Line of Credit (HELOC) accounts. Plus consumers feel wealthier whether they have a HELOC account or not. When home prices decline, home equity falls and cuts into consumer spending. Personal income is a comprehensive figure, but also incorporates taxes consumers must pay. By removing personal tax payments from personal income, we are left with disposable income. This is what consumers have left to spend on goods and services. Adjusting for inflation reveals growth in real disposable income. Frequency Monthly. Source Bureau of Economic Analysis, U.S. Department of Commerce. Availability Usually the last week of the month. Coverage Data are for the previous month. Data for June are released in July.

Biggest Profit 2011 Day Trading Gold, Crude Oil and Euro Futures

815am est

-          We check the volume on the gold contract and we see the volume is higher on the 04-11 contract than the 02-11 on the gold.

-          We trade the higher volume contract, so lets look at rollover on the gold today.

825am est

-          The dollar index is trading in a narrow wedge pattern ahead of the news @ 830am

-          The GDP news is expected to push the dollar around, and we NEED the dollar to be moving for us to feel confident trading on this Friday morning.

-          The narrow wedge is a dangerous spot on the dollar, so if the news does NOT move the dollar we have some more concerns.

830am est

-          The reaction to the news is sluggish

-          The news came out as expected, so the markets have already priced this into the charts.

930am est

-          Its 930am time for the us open

-          We’ve made 100 ticks this morning, so now its all about protecting capital and taking the best trades.

-          Its up to us to keep this cash

-          Friday mornings can be hit or miss, we may see lots of moves, we may not.

-          Consumer confidence @ 955am est, this will likely be a big mover.

-          GDP gave us NOTHING at 830am, almost no reaction to the expected news.

-          Now we need to wait and see if the personality will change after the US open.

1015AM EST

-          We’ve had amazing success with crude oil buy ing pullbacks as the price tested new highs

-          Now crude oil at the HOD an d the dollar is pushing new highs

-          Dollar rises = crude falls

-          Looking to sell the highs on the crude oil

1110am est

-          The dollar, the gold, the crude are all rising right now

-          Its late in the morning on a Friday

-          What in the heck is going?

-          Riots in Egypt this morning

-          Euro fears sending more money to the USD and the Gold

-          And then there’s no real reason for the crude oil to be doing this other than a low volume late morning stop run,.

1130am est

-          We had a late morning rise on the gold futures and it took me 10 minutes to figure out WHY

-          1130 is the euro close, and the fears of the situation in europe have traders dumping the euro, and other European indexes and moving that money into a safer spot like the USD and more importantly the GOLD.

-          GOLD rises at 1130am based on the EURO fears and the EURO close of the day.

-         

FYI:

-          New auto trader I am testing and will release this weekend.

-          New Momentum indicator is done, and will be added this weekend as well

-          Do training on this next Wednesday @ 1130am