Thursday, February 6, 2014

9 Ways to Trade Non-Farm Payrolls| SchoolOfTrade Newsletter 02/06/14

“Goals are a means to an end, not the ultimate purpose of our lives. They are simply a tool to concentrate our focus and move us in a direction. The only reason we really pursue goals is to cause ourselves to expand and grow. Achieving goals by themselves will never make us happy in the long term; it’s who you become, as you overcome the obstacles necessary to achieve your goals, that can give you the deepest and most long-lasting sense of fulfillment.”

Reflections from Today:
·       Crude Oil went higher (+0.66% @ 97.96)
·       Gold higher, but ended flat (+0.02% @ 1257.6)
·       Mini-Russell went higher (0.75% @ 1098.5)
·       Red-Star News got markets moving early today
·       Jobless Claims come in lower (331k)
·       International Trade shows sluggish exports; emerging markets struggle
·       Equities starting to show signs of recovery (bargain hunting)
·       ECB’s Draghi backs off cutting rates; Hawkish tone to press conference
·       Twitter getting pummeled today, down 21%
·       Feb 6th, 1952 Princess Elizabeth becomes the new Queen @ age 27
·       All eyes shift to Friday’s Non-Farm Payroll Report

Economic News for Tomorrow:

Economic News Tomorrow
Friday morning begins with Non-Farm Payrolls, which is the most important news event we see as day traders.

Do you remember January’s Non-Farm Payroll report?  The bad weather in December, along with a sluggish economy led to a very disappointing report in January, which means that Friday’s Non-Farm Payroll report for January may be a sharp contract higher or lower.

Remember, if you plan on trading Non-Farm Payroll news tomorrow I recommend staying patient and waiting 15-minutes after the report is released so that you don’t get in too early before we find a trend to follow.

If the news tomorrow comes out ‘outside of expectations’ that will cause the market-personality to become violent and dangerous to try to trade until it calms down and finds a direction.

If the news tomorrow comes out ‘inside of expectations’ that will cause the market to trade in a very narrow range because the news report will have already been ‘priced into the market’. 

Eventually the price-action will breakout in one direction, and when it does we want to be trading in that direction with a runner profit-target to catch the big move that often follows this report.

Day trading plan for Tomorrow:

Crude Oil:

VIP Chart:
Crude Oil VIP Chart
Crude Oil pushed higher this morning, testing the prior week’s highs at 98.59 before collapsing back down into the range from Wednesday.  This move was very typical for the day before Non-Farm Payroll news is released.

Tomorrow, I am looking for an opening-print above 98.83 to begin looking for buying opportunities or below 97.44 to look for selling opportunities.

Anchor Chart:

Crude Oil Anchor Chart 34
Like most of the other charts we see this evening, Crude Oil’s anchor chart shows us consolidating around the 89.00 big-round-number as we go into major news tomorrow morning.

Crude Oil Anchor Chart 21
The (34) anchor shows us trapped at the highs of a price wedge just below 98.00.  We have major resistance above us at 98.82 and support below at 95.21.

Crude Oil Anchor Chart 13
Looking further, the (13) anchor chart shows us clearly in an up-trend, bouncing off the buy-zone at 97.82.  If we can get back above 98.00 (and the key moving-averages on this chart) we can confidently buy long up to a profit-target at the prior week highs at 98.59.

I am waiting, sitting-on-hands until after we see tomorrow’s Non-Farm Payroll report and then I will use this information to make an educated decision for where my next trade will be.


VIP Chart:
Gold VIP Chart
Gold went on another roller-coaster ride this morning, reacting to the Red-Star News early in the session, only to collapse back down into the same range it started from.  We had a great session trading Gold this morning in our Live Trade Room!

We are trading ‘in balance’ on the VIP chart going into Friday’s Red-Star News, and I am looking for an opening-print above 1267.5 to start buying, or below 1252.5 to start selling tomorrow morning.

Anchor Chart:
Gold Anchor Chart 34
The anchor chart of Gold looks very similar to Crude Oil, with a bullish trend on the (34) anchor but the short-term trend is clearly sideways and price-action is consolidating around the 1250.0 area.  We can see major support below at 1245.7, and resistance above at 1271.1.

Gold Anchor Chart 13
As we move to the (13) anchor chart we can see lower-highs and higher-lows in the price-action which tells us we have a consolidating market and a price wedge.  We can see support below at 1252.7 and 1245.7 along with resistance above at 1264.3 and 1269.6.

My plan for Gold is to wait patiently for the release of tomorrow’s Non-Farm Payroll report and then make an educated decision from there after we see the news and the REACTION to that news from the market participants.


VIP Chart:
Russell VIP Chart
The Mini-Russell pushed higher this morning on bullish Jobless Claims news and optimism for the future ahead of tomorrow’s Non-Farm Payroll news, which is expected to be very bullish.

We had a narrow trading-range today, even though we had many trading opportunities inside that range, which points to a very WIDE range in tomorrow’s trading session. 

I’m waiting for tomorrow’s news release, but if we see the opening-print above 1105.2 I will begin looking for buying opportunities, and below 1093.7 I’m looking for selling opportunities.

Anchor Chart:
Russell Anchor Chart 34
The Mini-Russell looks very bearish on the (34) anchor chart this evening.  We can see a long term bearish price channel and we are below last week’s lows and below the big-round-number of 1100.0.  We can also see that current price at 1098.0 is pushing into the highs of the bearish price channel so trying to buy this area will be a challenge, as smart traders will look to sell this resistance area.

Russell Anchor Chart 21
The (21) anchor chart shows us that buyers have been trying to push prices higher for the past 36 hours, but they clearly have their work cut out for them at the highs of this bear price channel.  We see resistance overhead at 1111.8 which will make for an excellent place to sell short in this downtrend, and if we do get short we have a profit-target down at the buy-zone of 1083.8.

Russell Anchor Chart 13
The (13) anchor chart shows us a bullish market-personality with higher-highs and higher-lows as price tests the highs of this bear price channel.  Furthermore, we can see an excellent buying opportunity at the support level at 1093.3. 

We can draw a trend-line as support below us, and the highs of the price channel act as resistance above us… all of this telling us to be patient and wait for tomorrow morning’s news report to be released so we can see the react and trade with the new trend that comes from it.

My plan for the Mini-Russell is to be technically, emotionally, and physically prepared for a very important news report tomorrow. 

I’m ready for anything, and will wait for 15-minutes after the news is released to make an educated decision along with our members in the Live Trade Room.

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