Thursday, April 21, 2016

Trade the Volatility | Crude Oil, Gold, E-mini & Euro Futures 04/21/16



"When popular opinion is nearly unanimous, contrary thinking tends to be most profitable.  The reason is that once the crowd takes a position, it creates a short-term, self-fulfilling prophecy. But when a change occurs, everyone seems to change their mind at once."


Notes for Tonight’s Newsletter:

Another session filled with volatility today across all markets; Crude Oil pulled-back off yesterday’s big run higher, the S&P got tossed around by some earnings reports, while Gold and Euro were chaotic on the reaction to statements from the ECB this morning.


Crude Oil is bearish this evening trading inside a range as it tries to finish rotation to the lows of a bear channel and complete a measured-move target for the sellers.  The bear channel tells us to expect rotation from high to low, and tells the sellers to look for 'trap' opportunities at the highs on the way down to the lows.  The trading-range has a bear-bias so the sellers will be looking for buyer-failure at the highs and breakout-pullbacks at the lows while the buyers will be looking for ways to pick a bottom if the sellers fail to continue the breakout pullback below 43.00.  The measured-move is waiting as a target for the sellers and the and the high of day (44.48) is the target for the buyers tomorrow.

E-mini S&P is quite similar to crude oil this evening with a bearish trend and trying to complete its rotation down to the lows of a bear channel and a triple measured-move tomorrow.  The bear channel tells us to expect rotation from high down to low and the sellers will be looking for traps at the highs and continuations down to the lows.  The trading-range tells the sellers to look for failures at the highs and buyers to look for seller-failures at the lows for a possible bottom.  The measured-move at 82.75 is key support and resistance right now, with the triple measured-move being a target for the sellers and the high at 2104 being a target for the buyers tomorrow.

Gold is bearish with a spike & channel and a possible larger bear channel, which gives the sellers plenty of trading opportunities to work with tomorrow, but we're only a few pushes away from a triple measured-move so the buyers will be ready as well.  The bear spike & channel tells the sellers to look for buyer-failures up at the 'correction zone' overhead, and there may be a larger bear channel that will also give sellers another shot if the spike & channel doesn’t hold.  The measured-moves will be key areas of support and resistance for tomorrow, with the bears aiming for the triple measured-move and the bulls gunning for the high of day at 72.4.


Euro is bearish and trading at not only the lows of a channel but also at a triple-down off the highs from earlier today, and with a short-term megaphone on the chart this evening we may see some sideways movement in tomorrow's session.  The bear channel tells us to expect rotation back up to the highs tomorrow, especially since we have a double-bottom at the 'triple-down' support level.  The megaphone will be key support and resistance for scalpers to play with a sideways market tomorrow, which is likely after such a big-range day we saw today.

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