Monday, February 22, 2016

Trade Plan for Tuesday | Crude Oil, Gold, E-mini & Euro Futures 02/22/16

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Notes for Tonight’s Newsletter:
Crude Oil is bullish, but the short-term wedge and trading range tell us the best buying opportunities will come after a bearish correction tomorrow.  Today's aggressive move higher looked like a spike & channel but the best fit was a wedge, which is traded the same way, looking for a deep correction back to the base of the wedge followed by seller-failure for the most reliable opportunity.  Also, if the buyers fail to hold the 'correction zone' around 32.75 then we expect the sellers to send this price back to where it started today down at 31.60.  If price decides to push higher we have a range to work with and we will be looking for 'range rotation' and the '2-try rule' for buying opportunities.

E-mini S&P is bullish with a spike & channel and trading range which both tell us to look for buying opportunities using bear-traps at support levels below.  The beginning of today's session started with such strength at we assume buyers will be waiting for a deep correction to get into the next move at a lower price, and the levels at 1931.0 and 1924.0 look great, but if they can’t hold below 1924.0 we will slip below last Friday's high and price will likely tumble all the way down to today's low at 1908.25.  If price holds this pullback and pushes back to the highs we have a trading range and we will look for range-rotation and use the '2 try rule' from there.

Gold is bearish at first glance, but a quick 'look left' and we can easily remember the big short off the highs from last week and we are now back in the buy-zone for last week's wedge.  Price collapsed this morning to finish the move that started on Friday and it’s easy to see the sellers struggled to finish the move with even a double-bottom at today's low which tells us the buyers are likely buying anything that test support levels in this area.  The best opportunities for buying will be at support levels so we will be looking for price to dip lower tomorrow morning followed by seller-failure to send it back higher.  If we push higher we will use the trading range rotation to define the best opportunity from there.

Euro is bearish but trading at the lows of the multi-week channel which tells the sellers to be patient for a bullish correction before selling down at these lows because the buyers have the best shot in the short-term.  The euro tumbled lower this morning and finished the day in a range with a clear bear-bias which appears to be a 'trap' waiting to fool sellers into chasing this move lower.  We have identified areas of resistance overhead and will be waiting patiently for buyers to fail at those levels so we can get short tomorrow.  Buyers want to 'buy low' so they will be looking for 'bear-traps' at today's lows if price pushes back down again, and if we push higher we need to see the buyers 'hold a pullback' if we want to buy pullbacks on the way up to resistance overhead.

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