Monday, March 21, 2016

4 Trading ‘Traps’ for Tuesday | Crude Oil, Gold, E-mini & Euro Futures 03/21/16



“In essence, if we want to direct our lives, we must take control of our consistent actions. It's not what we do once in a while that shapes our lives, but what we do consistently.” 

Notes for Tonight’s Newsletter:
Crude Oil is bullish, but we have two big clues telling us to wait for a 'trap-low' for the most reliable buying opportunities tomorrow.  We have a bull channel, trading-range, triangle, and a measured-move to work with tomorrow.  The bull channel tells us to look for rotation from the lows up to the highs of the channel.  The trading-range tells us the sellers will try to rotate price back to the lows of the range, which means the buyers will be looking for sellers to try twice and fail before they buy.  The triangle is the biggest clue on this chart and gives us an area of interest for the breakout pullback, and the measured-move provides an easy target for the buyers up at 42.19 tomorrow.

E-mini S&P is bullish but a sloppy session today tells us a lot of buyers missed this move so we will be looking for 'bear traps' at the lows for the most reliable trades tomorrow.  We have two bull channels, trading range, and two measured-moves to work with tonight.  The long-term channel is rotating from the lows back to the highs and will act as a long-term target for the buyers tomorrow.  The short-term channel is more important because we can see this is the '2nd test' of the channel lows which is the last reliable opportunity until we get a correction lower.  The trading range tells us this next push higher will be a '2nd try' for the buyers which will almost always be sold, and the best way to buy is with a seller-failure off the highs of the range.  The measure-moves will provide the buyers will targets and they also tell us we dont have many options if price goes higher overnight until we get a correction.

Gold is bearish, but with a recent 'overshoot' of the lows and a triangle on the chart we are waiting for a bull-trap at the highs for the most reliable trades tomorrow.  We have a multi-day channel and a bearish triangle on the chart this evening.  The bear channel covers multiple days so its not the most reliable thing to use, and it has a double-overshoot of the lows which tells us to expect an overshoot back to the highs of the channel.  The bearish triangle is the best information we have for tomorrow and it shows us the sellers appear to be failing at the lows which will usually send price back to the highs and we will be looking for bull-traps at the highs. If price pushes lower we have to beware selling into the range-lows at 41.2 but we will be looking for a breakout-pullback to the point of the triangle for the next selling opportunity.

Euro is bearish, but trading at the lows of today's range is a horrible place to sell until we see some proof of buyer-failures tomorrow.  We have a multi-day bear channel, a trading range, and a couple measured-moves to work with this evening.  The bear channel tells us the sellers will try to finish their rotation back to the lows of the channel, and if they cannot test the lows it will become an 'undershoot' and price will try to 'overshoot' to the opposite side.  The trading-range, combined with the measured-moves may be the most important information this evening because we cant sell the low of the range and if the sellers are successful at a break lower they will run into the measured-move support levels.  The range tells us to look for failures to buy the lows with the '2 try rule' and then look to sell up near the range highs for the most reliable selling opportunities.


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