Thursday, May 19, 2016

5 Trades for Friday | Crude Oil, Gold, E-mini & Euro Futures 05/19/16



“Take the first step in faith. You don’t have to see the whole staircase, just take the first step.” -Martin Luther King Jr

Notes for Tonight’s Newsletter:
Crude, S&P and Gold are all bullish with the Euro trading inside a range after what was a volatile session that saw a complete trend reversal in three out of four markets today.

Crude Oil is bullish and trying to complete a second leg higher inside an aggressive bull channel which tells us the most reliable trading opportunities will be using pullbacks and bear-traps at support levels tomorrow.  The bears had control until shortly after lunch today before the buyers ripped higher, held a pullback and now will keep hunting for the symmetrical second leg on the way back to yesterday’s highs.  The bull channel and spike & channel both tell us to keep looking 'long' buying pullbacks with new higher-highs and looking for 'traps' at previous areas of support.  Sellers need to be patient right now and wait for this market to make a lower-low and hold a retracement before they can get anything reliable to the down-side.

E-mini S&P is bullish and trying to break through a triple measured-move this evening which tells the buyers to either look for a breakout-pullback above the measured-move or wait for a deep pullback and use a 'bear trap' to get into the move back to the highs.  Just like crude oil, the bears had control until the afternoon session today before the buyers got a new higher-high and held the pullback to take control with a target back to the high of the day at 2044.  The bull channel tells us we are due for rotation back to the low, and we can assume buyers will be waiting at all support levels to find ways into this move back to the highs.  The big challenge will be the 'triple-up' resistance overhead which tells the sellers to wait for a breakout-pullback above 2040 to clear resistance or they need to wait for a deep pullback to make sure they have enough room on the trade.  Sellers will need to stay patient until this bull market can make a new low and hold a pullback in the opposite direction.

Gold is bullish in the short-term and buyers are trying to force the 'swing sellers' to give up and let them get back to the high of the range tomorrow but they need to be careful not to buy too high because the bears are still gunning for the low.  Just like Crude and the S&P we can see the bulls took control of this market in the afternoon but the key difference is that they have only taken back half of the move down which means 'swing sellers' will still be looking for a re-test of the 1244.6 low tomorrow unless the buyers can hold them off on the next rotation back to the channel low.  Sellers will be looking for the buyers fail in the 'battle zone' below and the buyers will be hunting for the 1262.3 highs.


Euro is range-bound and trying to find direction this evening after a multi-day bearish trend appears to be finding a bottom.  The range tells us to look for failures at the highs and the lows going back into the original range until we see a strong breakout hold and find a new trend tomorrow.  Today's session started with a narrow range and then tried to break lower with little success as price keeps getting pulled back into the range.  Our plan tomorrow will be to use range rotation and the 'pendulum swing' to find failure opportunities until something changes.

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