Tuesday, February 2, 2016

Trading Volatility the SAFE Way | Crude Oil, Gold, E-mini & Euro Futures 02/02/16

“I have not failed.  I’ve just found 10,000 ways that won’t work.  There is no such thing as failure, only results.”

Notes for Tonight’s Newsletter:
Crude Oil is bearish but we are sitting on major support this evening so we expect the sellers to take profit here and wait for price to correct higher before selling more tomorrow.  Sellers kept control for the second day in a row today with a bear channel and a measured-move down.  Our goal is to sell the highs of the channel, which tells us to stay patient to sell the highs tomorrow.  Buyers will be looking for a higher-high and hold the pullback for a shot at buying back to the channel highs overhead.

E-mini S&P is also bearish this evening with a completed measured-move and a spike & channel telling us the best opportunities will be to sell after a bullish correction tomorrow.  The bears took clear control early in the session today with a spike & channel and finished the session with a measured-move.  Sellers want to see a bullish correction to sell this at a higher price and they will be watching for buyers to fail on the pullback. We know the spike & channel may correct all the way back to 1920 before the sellers resume this trend, and the buyers are looking for a new higher-high and hold a pullback to have the confidence to get 'long' during that correction.

Gold is bullish and trading inside a megaphone pattern which will likely send price up to the highs before we see a possible bear-trap to push higher tomorrow.  Gold has a bullish-bias to the megaphone pattern and with three tests of the lows we know this is the move the buyers want to send it higher.  We expect the bulls to take profit at the highs of the megaphone, but we can’t sell the highs with confidence so buyers will be looking for the bears to fail off the highs for a possible aggressive push up to the measured-move (1135.0) and major resistance (1136.7) targets overhead.  Sellers need to be careful right now with this type of pattern, but they will be looking for a lower-low and hold the pullback to consider selling it short back to the lows of the megaphone.

Euro is bullish with a spike & channel and headed to test the highs early tomorrow morning.  The most reliable trades will come at the lows of the channel, but we may get a chance to trap some sellers at the highs to complete the measured-move.  We have a multi-day bullish spike & channel and we are trading higher off the lows this evening.  Our goal is to find buying opportunities on the way up to the channel highs, take our profit and then look for rotation back to the channel lows so we can do it again.  We may see an aggressive opportunity at the channel highs if the sellers fail which would allow us to get the measured-move accomplished before heading back lower again.  Sellers have a challenge right now, they want to wait for the completion of channel rotation, ideally completing the measured-move and then sell after a lower-low and a hold of the pullback.

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