Thursday, January 14, 2016

Volatility Strategy for Friday | Crude Oil, Gold, E-mini & Euro Futures 01/14/16

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Notes for Tonight’s Newsletter:
Crude Oil is range-bound and trading at the highs which means sellers will be looking for buyers to fail on the next pullback to sell the highs with a target back at range lows.  We have been trading inside the same range since Tuesday, and although the buyers took control in today's session we can easily see the test of yesterday’s high was followed with a failed 2nd attempt to push it higher, and when you combine that with the range high you know the buyers are walking on thin ice.  Sellers want to see buyers fail on this pullback, even if it pushes back to the highs, while the bulls need to see this pullback hold if they want the confidence to buy up to a target at Tuesday’s high of 32.21.

E-mini S&P is bullish with a spike & channel this evening which tells us to wait for a deep correction off the highs for the most reliable buying opportunities tomorrow, and if they fail we have a big target back at today's low.  Buyers responded with strength today, trapping the sellers at the lows and shooting higher.  At this point most buyers will be waiting for a test down around 1895.00 before getting back into this move, and sellers will be patiently waiting to sell into failed pullbacks with a target back at today's low and major support around 1870.00.

Gold is bearish but oversold this evening after an overshoot of the measured-move and channel-lows, telling us that sellers will be looking for a deep correction higher before they look for failed pullbacks to get short tomorrow.  Sellers have control but price is too low to sell here for most 'bears' so we will look for a test of overhead resistance and then sell into buyer-failures.  The buyers need to hold the next pullback to grab control, and even then they need to be careful buying into overhead resistance.

Euro is trading inside a megaphone this evening as price whipped around from high to low on incredible volatility today which tells us to look to buy lows and sell highs until we see a trend direction.  We have 2 tests of both the highs and the lows which tells us a 3rd and final test may be in the cards tomorrow back to the highs, while the recent bear channel tells us this market may choose to run back to Thursday’s lows.  Buyers need to see a new higher-high and hold the pullback to the moving-average.  Sellers want to see a correction higher and then a failed pullback to get short off the range-lows with a target back at the megaphone lows and 8261 target.

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