Wednesday, February 29, 2012

Dollar index day trading strategy works again for +245 ticks of profit

We began this morning with a day trading strategy that used economic news, the dollar index, and simple price structures to plan our trades ahead of time and then we sat back and waited for price to come to us and we traded that plan perfectly.  We didn’t have ALL winning trades today, that’s not our goal, we executed the plan and we made 245 ticks of profit trading all four of our favorite markets, Euro, Crude oil , E-Mini-Russell and Gold futures.

Dollar Index Day Trading Strategy

The dollar index gave us some easy clues this morning regarding the short term trend and market personality.  First, we knew about the GDP news @ 830am EST today so we expected things to be a little sloppy at first, and we know that 2pm EST today was Beige Book so we knew our time was limited, get in and get out.  Second, the dollar index was trading in a narrow sideways range with a price wedge right above it.  These two clues told us that we needed to look for both buying and selling opportunities along with to expect fake-out breakouts this morning on the markets we are trading.

Crude Oil Day Trading Strategy
Crude oil futures day trading strategy was quite simple, and very similar to the strategy we have already used this week to earn over 300 ticks of profit on Monday and Tuesday.  This morning we have a price wedge and inside trading day, big clues, telling us to fade-the-breakouts selling as price rises and buying as price falls.  We saw price move outside of the price wedge and we bought it going back up for some easy profits.


Euro Fast Track Trade
The euro was another great trade today, and we had the euro nailed when it broke new lower-lows below the PLOD.  Remember, when I'm inside the range from yesterday I am going to buy the PLOD and sell the PHOD but when price moves above PHOD I need to buy pullbacks and when it moves below PLOD I need to sell retracements.  Our last trade of the morning today was a retracement short when we broke below the PLOD and we called the trade with exact entries, stops, and targets over 10 minutes ahead of the entry so EVERYONE could trade along.  This trade was an example of the fast track method.


Gold Day Trading Strategy
Gold futures was our big winner today earning +75 ticks, and we really never saw it coming other than our usual day trading strategy which used a price wedge.  When gold futures tested the lows of the price wedge we quickly looked to BUY the lows, and when those buyers failed, and we made new lower-lows below the PLOD and below the price wedge the dollar index also moved higher which told us to get out of the long position and into a short position, which we did.  30 second after we got into the short position on gold the market fell quickly, filling all of our profit targets for +5/+10 and +50 ticks on the way down, netting us $750usd on a single trade live in our trade room.

Did you miss the action in today’s live trade room?  Want to learn how to trade like this with me every day?  Our advanced members have lifetime access to our trade room, and membership includes everything you need, including charts, data, indicators, tech support, and automated trading strategies.

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A word from our Favorite Uncle Jim (Rogers)

"they're jigging the employment numbers"

Notes from today's LIVE Trade Room Q&A Session

Difference between pullbacks and retracements

-       Pullbacks are when the price moves higher and then ‘pulls back to Support’.

-       Retracements are when the price moves lower and ‘retraces off the lows’

When we announce entries ahead of time?

-       With the fast track method trades

-       Every new trader will begin on the fast track method

-       Very simple

-       Always the PERFECT patterns

-       Then I feel confident committing to a pre-determined entry, stop loss and target.

-       Not every trade will have the ‘perfect’ recipe for success

o  Faster timeframes

o  Slower timeframes

o  Higher risk trades

Third week of March

-       Trade room will be closed march 12-16th

-       Re-open the following Monday

-       4 different asset classes expiring

Dollar index charts w/ 1 monitor

-       21range

-       180 days of data

-       Zoom ALL the way out to find the

o  Price wedge

o  Channels

o  Ranges

o  ‘advanced price-structures’

-       Look for the short term on this timeframe (just fast enough)

-       Look for the major turning points on that timeframe

-       Template = 89range

Why no Gaps?

-       24 hour charts, there are none

-       They don’t occur every day, so its hard to trade them with consistency

-       Often too much risk because you’re HOPING the price rises.

day trading strategy on gold futures

our day trading strategy on gold futures uses the 89range chart to locate the major bull price channel, and then we use the 55range chart to find the price wedge and the inside day, and then move faster to the 34 range chart where we can see the double-top and the support that come with it at 1770.0 and 1776.5.

We want to buy the PLOD and the price wedge lows along with the double-top support.  Take profit at the trigger-zone resistance in the middle of the price wedge and then look to sell the highs of the price wedge.
We will use the faster timeframe the 21 and 13 range charts to plan our entries.

Gold Day trading strategy

day trading strategy for E-Mini-Russell

Our day trading strategy for E-Mini-Russell uses multiple timeframes and begins with the 89 range chart with over 180 days of market data.  We can see the AB=CD pattern reversal-zone which provides major resistance overhead so we look for price to fail at these highs so we can sell it short.  We can see the short term price wedge so use the price wedge as your biggest clue and we are trading inside the range from Tuesday.

E-Mini-Russell 55 range chart gives us a lot more clues for our day trading strategy this morning.  We can see the double-bottom and the resistance that it gives us at 834.0, 840.50, and max extension at 849.5.  we can see the short term price wedge and we are at the highs, so looking to sell the highs of the price wedge, and we can see the inside trading day, below the PHOD and above PLOD.
As price rises I'm selling resistance first, and then with new higher-highs I will look for fake-out breakout then buy pullbacks.  If price moves lower I'm buying at the support levels below first, and then with new lower-lows I will sell retracements.

e-mini russell trading strategy

day trading strategy for the euro currency futures

The day trading strategy for the euro currency futures starts with the 89 range chart and we can see we’re at the highs of the bull price channel, the trend lines as resistance overhead, and the inside trading day below the PHOD.  With price off the highs we need to stay patient and wait for the euro to re-test the highs or the lows of the current range, and remember the Euro has a strong dollar index correlation so use that as your guide.

The 34 range chart further-defines our day trading strategy with a short term bull price channel, a double-top with 3 levels of support, and a new trend line support that defines a price wedge inside the trading range from Tuesday.

Inside day tells me to sell the highs and buy the lows, trading INSIDE the range we’re in, looking for fake-out breakouts.  Buy the PLOD and sell PHOD.  If price moves above the PHOD we buy pullbacks and if it goes below the PLOD we sell retracements.

The price wedge tells us to do much of the same, look for fake-out breakouts sell the price wedge highs and buy the price wedge lows.  The price wedge also tells me to fade-the-breakouts when we see the buyers or sellers fail above or below support and resistance.

The bull price channel tells me to buy at support as the higher percentage trade.  The price channel gives me a directional bias telling the that buying pullbacks or buying at support will be the better trades today.
The double-top tells me if we go above the 1.3500 we are VERY strong bullish and that we should buy pullbacks with new higher-highs, and if price drops to new lower-lows we will buy at the double-top support at 3350, 3310, and 3260 on the way down, with the target of re-testing the double-top.

Euro Day Trading Strategy

Day trading strategy for crude oil futures

The day trading strategy for crude oil begins with the 89 range chart and we can see the bull channel and the price wedge that has formed off the highs.  We are trading inside the range from Tuesday and we can easily see major support and resistance above and below us.  The 89 range chart seeks to locate the most important levels of support and resistance. 

The 55 range chart is a little faster and gives me more information that I can use to find my price structures looking at the new bull price channel and the trigger-zones as support below it.  We also see the price wedge and the we are currently trading in a trigger-zone at this time so look for price to rise above 107.45 going to the highs of the price wedge, and if price moves below PLOD we will get a test of 105.50 support so be ready to sell retracements.

The 34 range chart really defines our day trading strategy this morning.  We can see a bear price channel, inside trading day, and a price wedge all giving us big clues.  On top of the crude oil chart we have the dollar index correlation which is also trading in a narrow range so expect fake-out breakouts and fade-the-breakouts today until market personality changes.

What if price rises?  I'm selling as price rises at the trend lines, trigger-zone resistance, and price channel highs overhead.  Even after we break new highs above the bear price channel I'm still looking for the price reversal and selling at the next level of resistance.
What if price falls? I'm buying the price wedge lows, the PLOD, and then price channel lows as support.  Keep an eye on the TIME when we break below the PLOD we may have enough room to sell retracements below PLOD but beware selling directly support at the price channel lows.

The 21 range chart gives us another big clue in the form of a double-bottom which tells us there is additional resistance at 107.53 if price rises higher.  This resistance is right nearby the price channel highs and the 55range trigger-zone resistance.

Crude Oil Day Trading Strategy

Day trading strategy for dollar index

Our day trading strategy for the dollar index uses multiple timeframes this morning as we look for the best levels of support and resistance along with the short term trend so we can make educated trading decisions.  Remember the dollar index correlation when trading this morning.

The 89-range chart on the dollar index shows us much of the same from Tuesday.  We have the bullish AB=CD pattern which appears to be the main technical pattern in play right now considering that we are about to test the lows of the major trigger-zone at 77.840.  We expect to see 77.840 hold as major resistance, but if the dollar index breaks that support this will be a BIG CLUE of dollar index weakness which will then lead us to assume price is headed to the 77.330, 77.085, and then eventually later in the month of march should test the AB=CD reversal zone at 76.500 area.  We will be using this to form an opinion on the direction of the dollar index which will help us make educated decisions trading other markets.  The 89 range chart shows the me the big picture, the most important support and resistance levels, but it does NOT show me the short term trend.

The 13-range chart is much faster and defines (if any) the short term trend, along with using the major levels of support and resistance we found on the 89 range chart as the possible ‘turning points’ in the market.
We can see the bear price channel defined when we zoom out on this 13 range chart, and when we zoom in on the price action we can see the inside trading day just above the PLOD with a price wedge structure above us which will act like a price magnet.  Notice the trigger-zone as resistance overhead which will act as a turning point if price rises along with the top of the price wedge and the PHOD.  We can see plenty of turning points above and below us this morning with no clear short term trend so there is no directional bias with the dollar index as of now, which can easily change so keep an eye on the flat trigger line and new higher-highs and lower-lows.

Dollar Index Day Trading Strategy

Day Trading Strategies for Dollar Index , Euro, Crude, Russell and Gold futures

The James' Report:  Day Trading Strategies for Professional Traders

The most sophisticated trading strategies are always the simplest as well.  As professional traders we are constantly trying to resist the temptation from un-needed tools in our trading, and trying to over-think the markets.  Professional traders strive to begin each day like a child, without any knowledge of the past, but the confidence to tackle the day ahead with a very simple plan.  

Futures Heat Map

***Notes/Observations from around the world***

- Dow Jones Industrial closes above the 13,000 level for the first time since 2008

- Fed member Pianalto: Will take five years to get back to 6% unemployment

- Japan fund managers raise global equity weighting in Feb

- German Unemployment change slightly weaker than expected but unchanged MoM

- ECB 3-year allotment in line with expectations at €529.5B but had 800 banks participate vs. 523 prior

- Markets traded up ahead of ECB's LTRO which boosted optimism that the second long-term refinancing operation would ease the tension in the banking sector. Data showed that the 3-year tender, which was slightly higher than expected, attracted 800 bidders from 523 prior. Markets are still digesting the news and are moving erratically but remain in positive territory. Banks rallied during the session.


- EU Leader Summit draft document noted that the region was taking all required measures to facilitate economic growth and pledge June agreement on pilot phase of project bonds. The summit to pledge differentiated fiscal consolidation. The EU saw need to aid banks without excessive deleverage and sought more precise commitments on reforms and targets

- BOE members King, Bean, Tucker and Posen all testified on inflation in Parliament.

- BOE Gov King commented that unwinding QE was relatively straight forward operation with the process is a lot easier compared to stimulating the economy. The BoE would take whatever action it thought was appropriate on QE and no hard and fast expectation that BoE was going to do a lot more QE.  Main reason for QE was to bring growth in broad money back to normality

- BOE member Posen stated that second round of QE wouldl be as successful as the first round  and that the QE2 now was different than 2009 because market was not in panic mode. Lastly he noted that Japan needed to react quickly on its monetary policy.

- BOE member Bean stated that he saw a gradual strengthening of UK economy and that inflation would fall  back to target in the near term. He did caution some uncertainty over further inflation moderation down the road and noted headwinds from fiscal consolidation and de-leveraging

-  BoE Tucker noted that the outlook was highly uncertain and needed to keep policy under review

- BoJ Gov Shirakawa commented to parliament that the central bank would pursue strong monetary easing policy. The Gov reiterated his view that the central bank would maintain Zero Rate Policy until the 1.0% price target was in sight.

- Japan Fin Min Azumi also noted in Parliament that the BoJ effectively adopted inflation goals with a clear target of price increases

-  Italy Dep Fin Min Grilli commented that the risk of debt crisis contagion had yet to be overcome

- Poland Finance Ministry said to have forecasted its Q4 GDP at 4.3%

- Ireland Central Bank dep gov Gerlach: The central banks must do more to assess risks

- Sweden Central Bank (Riksbank) released its February Minutes which note that sluggish Euro Area growth impacted Swedish exports more than expected and concluded that inflationary pressures were low in the years ahead. Various members echoed the same theme in their commentary. Gov Ingves noted that he saw big differences between Northern and Southern Europe in terms of growth while there were bright spots in US economy. Member Jansson expressed concerned over slow pace of Euro Area improvement but recent agreement on EU Fiscal Compact was encouraging. Member Jochnick noted that economic developments in Europe weakened since December but Europe was on the right path and member Wickman-Parak added that the European economic slowdown had a pronounced effect on Sweden's exports with sSome improvement recently in both domestic and international data. She added that she could not see any reason to stop the current rate cuts

-  German gov't spokesperson commented that the German cabinet supported solar-subsidy draft legislation 


- The FX markets were steady heading into the ECB 3-year lending operation but overall dealer sentiment was stacked against the greenback due to the LTRO operation in Europe and the semi-annual testimony from Fed Chairman Bernanke. - The price action was initially choppy following the results of the 3-year LTRO but the number of banks participating added some concern. The EUR/USD drifted lower into the NY open around the 1.3440 level. There was some chatter of a large 1.3500 option barrier in the pair circulating (but unconfirmed).

Political/ In the Papers:

- Morgan Stanley had expected banks in Italy and Spain to increase their holdings of government debt by up to €120B in sovereign debt. Recent data from the ECB showed that Spanish and Italian banks increased holdings of their country's sovereign debt by record amounts in Jan.

- Out of Germany, the Frankfurt court banned airport strike action, adding that impact caused by air traffic controllers announced by the GdF union would be 'disproportionate' to the support it would provide for the demands by the ground workers. The GdF union stated that it would appeal against the court decision.

- The Telegraph's Ambrose Evans-Pritchard looked at the possible implications from Ireland's planned referendum on the EU fiscal pact. The move by Irish officials could lead to clashes with German officials. Although Ireland's top political parties support the treaty, some analysts believe there is a high risk that the measure could be rejected by their voters. Note that Ireland voted "No" to both the Nice and Lisbon treaties before being made to vote again. If Ireland rejects the fiscal agreement, it would make it harder for the company to receive a second EU bailout, if needed.

***Looking Ahead***

- 8:00 (EU) EU's Barnier speaks at Event in Brussels    
- 8:00 (EU) EU's Barroso
- 8:00 (PL) Poland Central Bank (NBP) Feb Inflation Expectations Survey: No est v 5.2% prior
- 8:30 (US) Q4 Final GDP Q/Q Annualized: 2.8%e v 2.8% prelim; Personal Consumption: 2.0%e v 2.0% prelim
- 8:30 (UD) Q4 Final GDP Price Index: 0.4%e v 0.4% prelim; Core PCE Q/Q: 1.1%e v 1.1% prelim
- 8:30 (BR) Brazil Jan Nominal Budget Balance (BRL): No est v -18.6B prior; Primary Budget Balance: No est v +1.9B prior; Net Debt to GDP ratio: No est v 36.5% prior
- 9:00 (CA) Canada Dec Teranet/National Bank House price Index M/M: No est v -0.2% prior; Y/Y: No est v 7.1% prior; HPI Index: No est v 149.11 prior
- 9:30 (US) Fed's Fisher speaks on economy in Mexico City    
- 9:30 (UK) Treasury Minister Hoban testifies on Euro-Area Crisis    
- 9:45 (US) Feb Chicago Purchasing Manager: 61.0e v 60.2 prior
- 9:45 (UK) BOE to buy £1.5B in 2019-2025 Gilts in reverse auction
- 10:00 (US) Fed Chairman Fed's Bernanke delivers semi-annual Monetary Policy Report    
- 10:00 (US) Feb NAPM-Milwaukee: 58.8e v 58.4 prior
- 10:30 (US) Weekly DOE Energy Inventories
- 10:30 (BR) Brazil Central Bank weekly currency flows    
- 11:00 (CO) Colombia Jan Urban Unemployment Rate: 10.8%e v 10.4% prior
- 11:00 (EU) EU Juncker before EU Parliament
- 11:00 (IT) Italy PM Monti with Portugal PM Coelho
- 12:00 (GR) Expected ISDA ruling if Greek sovereign credit event occurred
- 12:00 (DE) German Chancellor Merkel hosts Town Hall on Germany's Future in Erfurt    
- 13:00 (US) Fed's Plosser speaks on economy in New York    
- 14:00 (US) Fed Releases Beige Book Economic Survey    
- 14:00 (EU) Denmark PM Thorning-Schmidt speaks at Brussels Think Tank    
- 14:00 (AR) Argentina Jan Construction Activity M/M: No est v 1.2% prior; Y/Y: No est v 2.6% prior
- 20:00 (CN) China Feb Manufacturing PMI: 50.8e v 50.5 prior
- 21:30 (CN) China Feb HSBC Manufacturing PMI: No est v 48.8 prior


Today's Economic News:

This morning we kick off the day with a major news event here in the US and we have a day filled with news that will hopefully give us lots of trading opportunities.

Today News for Day Traders
GDP at 830am EST is the broadest measure of economic activity and its always going to be watched by traders of all types.  One thing we always notice about the GDP news is the LACK of reaction from the markets mainly (we assume) because with so much emphasis on 1 news report the market has already ‘priced in the news’ taking the estimates and assuming those estimates will be true and placing trades ahead of the news release that will account for the same result.  Don’t be surprised if the markets sit sideways and sluggish if this news comes out within the expectations this morning.  If it comes out higher or lower THEN we have some action to look forward to.
Quarterly GDP News
945am EST this morning, just after the US markets open, we have another important news report, Chicago PMI, which is a leading indicator of the recovery because the ‘purchasing managers’ in large companies MUST have a good idea of business conditions when they buy resources for their companies so this is always being tracked by professional traders to add ‘fuel’ to the recovery effort, or toss water on it!  Beware, this news is released EARLY to certain people so you will see this news reaction BEFORE the news comes out.

Chicago PMI News
1000am EST this morning we have the Fed Chairman Ben Bernanke testifying in front of the House Budget Committee which will undoubtedly be on everyone’s monitors looking for clues to what he is saying.  As the head of the central bank in the US, this guy deserves to be listened-to when he speaks and this report will come in 2 parts, the first part is published and read as a statement so there won’t be much of a reaction to that…the 2nd part is open for live questions so traders will be listening during his Q&A session for clues in regards to monetary policy and the next fed meeting.

Crude Oil Inventories News
1030am EST this morning we have our favorite news of the week, crude oil inventories which is always a big mover for crude oil on Wednesdays.  We typically see crude oil prices flat ahead of this news, so I'm sitting on hands from 1015am EST through the news at 1030am EST and I'm trying NOT to jump right into the market after the news is released, no matter how confident I am in where price SHOULD go.  It’s always important to remember that crude oil is a fade-the-breakouts type of market personality so when price moves higher we want to look to sell it when it fails, and vice versa.  Also, when this news is released I'm going to look for the inventory number AND the demand number, which will be used together to make an educated decision on where the markets should be headed, and then I wait for the technical pattern to help me enter in the direction I think it will be moving in the near future.  Don’t expect crude oil to react like normal around this time…so be careful and stay out of the water if it’s too choppy (or if you just ate, hehe)

This morning will likely come to a close a little after 1100am EST because we also have early-afternoon news regarding the Beige Book, which is nothing more than the ‘notebooks’ used by the 12 different fed governors to reflect what’s happening in their local areas.  In the old days these were actually books that were brought together when they would meet 8 times a year, but nowadays we have them done in 1 central location because there is only 1 central bank, rather than 12 different locations around the US.  Look for traders to be watching this closely, looking for clues for the next FOMC Day in the near future.


I use for my live news data, and I highly recommend it to all of my clients looking for this type of data.   We have partnered with TTN to provide a FREE Trial of this service by following this link

Tuesday, February 28, 2012

Fade the breakouts with price wedges on euro and crude oil futures

Another day filled with profits in our live trade room, and this morning’s day trading strategy focused on a lot of major news coming out this morning along with a very big clue from the dollar index correlation which helped us earn 185 TICKS of profit.

Joe's Trades Today

dollar Index trading strategy
Our day trading strategy began with the knowledge that we had major news being released at 830am and 1000am EST this morning so we expected to see more action a lot earlier today.  IN addition to our news day trading strategy we also got some big clues on the dollar index, specifically the dollar index price wedge price structure which is always a big clue for us regarding market personality of the markets we trade.


Crude Oil Day Trading Strategy
Our day trading strategy for crude oil was very similar to that on Monday, we had price trading inside the range from Monday, and we saw another price wedge structure that gave us some very easy clues.  Along with the clues from crude oil we also had that market personality traits of a dollar index price wedge so we knew exactly what to do and how to do it…just stay patient and fade those breakouts!

Euro Day Trading Strategy
The euro currency futures gave us our biggest trade of the day this morning after we used our simple day trading strategy to fade-the-breakouts when price moved below the price wedge lows when the dollar index moved higher after the 1000am consumer confidence news.  The price wedge on the euro was very easy to find, and we followed the plan we outlined together with our members at 730am EST. 

Did you miss the action in today’s live trade room?  Want to learn how to trade like this with me every day?  Our advanced members have lifetime access to our trade room, and membership includes everything you need, including charts, data, indicators, tech support, and automated trading strategies.
Don’t miss tomorrow @ 730am EST when we post our morning prep on this blog and get the day started again for another profitable day of live trading with our members!

Everyone loves transparency, My trading statements are available on request

DAY trading strategy for the e-mini russell futures

DAY trading strategy for the e-mini russell futures.  today we have a perfect example of a price wedge so sell the highs and buy the lows.

E-Mini Russell Day Trading Strategy

day trading strategy Up-Date @ 1015am

We've had an incredible day with the trading the wedge on crude oil, now its time after the news is out to do a quick recap and up-date on our next trading opportunities.

Crude Oiil we sill want to sell the highs, buy the lows, and avoid the middle of the wedge.

Crude Oil Trading Strategy

The Euro is trading in a wedge so sell the wedge highs and then if price drops we buy the channel lows.

Gold Futures Day Trading Strategy