Tuesday, July 19, 2016

4 Traps to Avoid Wednesday | Crude Oil, Gold, E-mini & Euro Futures 07/19/16



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Notes for Tonight’s Newsletter:
Markets were a bit choppy today with some narrow ranges that surely reinforced the importance of buying low, selling high and following our trading rules but that’s not slowing us down from finding some excellent opportunities in tomorrow's session; Crude Oil and Euro are bearish, while the S&P and Gold are both range bound this evening.


Crude Oil is bearish trading lower with a spike & channel this evening; The day began with a strong spike higher this morning which immediately reversed lower and turned into a bearish spike & channel which completed the measured-move target and tells the sellers to look for traps above prior swing-highs.  Sellers clearly have control but selling into the low isn’t a very reliable trading opportunity so we assume the bears will be waiting for moves back to previous resistance levels overhead so they can 'sell high' with a target back to the lows.  Buyers need to be patient right now and wait for a successful breakout pullback above the channel high with a target up at the correction zone at $46.00.

E-mini S&P is bullish on the way back to the highs of a trading range this evening; Just as we expected, the bulls keep buying the low of this multi-day trading range with the goal of going back to the range high and possibly up to a new all-time tomorrow or later this week.  With the strength of this recent bull move we can expect buyers to be interested on the next pullback, however, we can also see there are resistance levels in the way so the bulls need to get a breakout pullback above the resistance or they need to look for a pullback before they buy.  Sellers need to be patient and wait to see if the next pullback fails and then look for a target back to range lows or they need to look for buyer-failure at the range high with the goal of selling the high which is assumed to be low reliability because of the bullish bias going into this range today.

Gold is range-bound and trading at the highs of a bullish triangle this evening as it tries to fill the gap from last Friday's close; Gold has rejected the last four attempts to re-visit Monday's low which is a clear sign that sellers aren’t committing to this market until they take care of some un-finished business this week back at the closing price from last Friday.  We can give the edge to the bulls right now with higher-highs and higher-lows which tells the bulls to look for opportunities with a breakout pullback above the high of the triangle, but the most reliable buying opportunity will be using traps and failures at the previous swings down at 29.1, 28.1 and 25.8.  Sellers have a few options right now; first, they can try to sell the high of the triangle for small scalps using buyer-failures, or they can wait for price to fill the gap at 1338.0 and then look for the turn back down, or they can wait for a successful breakout pullback below the triangle low with a target back to Monday’s low at 1323.5 but selling the low of the triangle will certainly be the least reliable considering the lack of success we're seen this week trying to sell the low.


Euro is bearish and trading at the high of a spike & channel this evening; The bears had control for the entire session today starting the session with a big push lower which then turned into the spike & channel and we recently just rotated off the lows back to the highs where we assume that sellers will be waiting to sell more with a target back to the lows tomorrow.  The spike and channel tells the sellers to look for traps and failures up at previous resistance levels overhead with a target back at the low.  The bulls have a short-term spike and channel of their own as well which tells the bears to focus on selling up at the highs and beware a possible trap around the correction zone just above the 10,300 level.  Buyers have an easy job, they need to be patient to see a successful breakout pullback above the bear channel high and then get to it quickly before sellers re-enter the market up around the correction zone and battle zones overhead.

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