Monday, May 9, 2016

6 Trades for Tuesday | Crude Oil, Gold, E-mini & Euro Futures 05/09/16

“Knowing is not enough; we must apply our knowledge. Willing is not enough; we must take action to see results!”

Notes for Tonight’s Newsletter:
Today was 'Reaction Monday', following last Friday’s Non-Farm Payroll Report, which told us to expect some fireworks in the wake of such big news at the end of last week; Crude Oil and Gold have strong bearish trends, while the S&P and Euro are both trading sideways inside a range.

Crude Oil is bearish with a spike & channel this evening, and the sellers do not appear to be backing down from selling back to the lows of the channel as we go into the overnight session.  With such a strong bearish trend today we would expect to see sellers taking profit at the lows, but looking at the last candlestick of the session it doesn’t look like anyone got out of their short positions, which leads us to believe that the sellers are still hunting for channel rotation back to the lows and the 'triple down' support.  The ideal scenario for the sellers will be to sell after a 'bull trap' above prior swing highs, and the buyers cant even think about trying to buy this market until they can get a new high and hold a pullback.

E-mini S&P is trading inside a range this evening which tells us to buy the lows and sell the highs using failures until we see a strong breakout that will hold and find a new direction tomorrow.  Our focus will be on range rotation, focusing on failures at the highs and lows, and using the pendulum swing to project targets above and below the range.  One thing that stands out this evening is the rotation from the low to the high of the range.  The sellers failed at the lows, and the buyers clearly bought the lows, but the test of the high was very weak, telling us the pendulum may swing a little higher before this price makes the move back to the lows.  The bottom line is that this range-bound market tells us to sell the highs and buy the lows using failures and that’s what we will be focused on until something changes.

Gold is bearish with a strong trend that is quickly showing signs of profit-taking at the end of the session this evening which tells us to look for 'traps' above prior swings for the most reliable selling opportunities.  The trend was so strong today that price didn’t even test the moving-average until 11:00am EST this morning before it started showing signs of struggle going lower.  The big wicks at the bottom of the candles are a clear indication that sellers should beware selling more until they can get price off the lows and above some prior swing levels overhead.  Buyers will be looking for a new higher-high and a pullback to hold before they have confidence to buy this market because sellers will be waiting to sell into any move off the lows.

Euro is range-bound and trading at the lows of the range this evening which tells the buyers to be ready to buy the lows when they see the sellers try twice and fail.  The trading range tells us to look for rotation back to the highs, and focus on using seller-failures at the lows.  There is a potential bear channel on the chart which will be combined with a measured-move as support that the buyers will be looking for as an easy way to buy low and take profit at the highs tomorrow.

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