Wednesday, February 24, 2016

Trading with Traps ahead of Reversal | Crude Oil, Gold, E-mini & Euro Futures 02/24/16

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“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.”

Notes for Tonight’s Newsletter:
Crude Oil is bullish and trying to complete a measured 3rd leg higher this evening with a short-term range that tells us the best trade will come after a 'bear trap' at the lows.  We have two channels, three legs higher, and a range to work with on this chart.  The channels give us support areas to look for buying opportunities, the range gives us an easy location to look for bear-traps, and the measured-move gives the buyers an easy target overhead.  Keep in mind, if we make three legs higher we will expect significant profit-taking from the buyers and a deep correction off the highs which will give the sellers a chance to reverse the direction back down to the major channel lows.

E-mini S&P is bullish on its way to completing its third measured leg higher today which tells us to look for pullbacks on the way higher, but also to look for a reversal after the target is achieved.  We have a channel, three legs higher, and a small trading range to work with this evening.  The massive overshoot of the channel highs clearly illustrates how strong this move was today, and such strength typically gives us a big correction in the opposite direction.  Three legs higher is a significant move for the buyers which tells us there will soon be profit-taking and a deep two-legged correction off the highs and the trading-range down at 1919.00 gives the sellers an easy target for the correction off the highs. 

Gold is bearish after collapsing off today's highs and the recent overshoot of the channel lows tells us to expect a bullish correction before the sellers try to finish the job back to the lows of today's range.  We have a bull wedge and a bear channel to work with this evening.  The bull wedge tells us to expect a deep correction back to 33.6 but that level easily broke and they used it as resistance on the opposite side which is a big clue that they want to see this move back to the 'failure' level at 1222.4.  The bear channel has an overshoot, which tells us to look for an overshoot on the highs before this price pushes lower again.

Euro is bullish with a recent double-overshoot of the channel which tells us to look for a measured-correction off the highs for the best buying opportunity tomorrow.  We have a bull channel, trading-range and measured-correction to work with this evening.  The bull channel has a double-overshoot at the highs which tells us to expect a deep correction to the channel lows.  The trading-range has recently failed the rotation back to the highs at 0463 which tells us to look for a test of the expansion support at 9983 and the measured-correction off the highs gives us easy support at 0612 for the best opportunity tomorrow.

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