Monday, August 22, 2016

8 Trades for Tuesday | Crude Oil, Gold, E-mini & Euro Futures 08/22/16

“Only by contending with challenges that seem to be beyond your strength to handle at the moment you can grow more surely toward the stars.”

Notes for Tonight’s Newsletter:
The markets aren’t wasting any time this week, getting a jump on the last full week of the month of August with some great opportunities setting up for tomorrow; Crude Oil is bearish, S&P is sideways, while the Gold and Euro are bullish going into Tuesday's Session.

Crude Oil is bearish and trading at the lows of a channel this evening; Sellers have control and will be looking for opportunities to sell the highs of the channel as well as any resistance level overhead until the trend changes.  One thing that stands out on this chart is that we haven’t recently finished channel 'rotation' back to the highs which tells us that sellers are willing to be more aggressive in order to avoid missing the move lower.  Buyers need to be patient right now, waiting for a strong push higher, hold a pullback and then look for a measured-move up to the battle zone around 48.12.

E-mini S&P is trading sideways inside a triangle this evening; Triangles are basically the same as trading-ranges, and with ranges we expect rotation from high to low and back to the high and our focus is to stay away from the middle, sell the high and buy the low using failure set-ups until we see a strong breakout which can hold a pullback and turn into a new trend.  Currently, the buyers are making their way back to the high of the triangle where we assume sellers will be waiting for a move back to the lows.  Once we get back to the lows we know the buyers will be there to buy it back up to the highs.

Gold is bullish and trying to finish a re-test of the highs this evening; The bulls have control after a 'market mistake' coming off channel lows but there isn’t much room to buy before we run into overhead resistance so we will be looking for a strong breakout-pullback to go higher or re-test of the gap at 40.2 for a trap-low before making the move back to the highs.  Sellers have a tough job in front of them tomorrow because we assume a pullback will be seen as a buying opportunity so the bears need to see a strong breakout-pullback below the 38.3 swing to get the buyers out of the market before they can rely on anything going back to the lows.

Euro is bullish and trying to re-test the highs but the weekend gap-fill tells us to be patient to see what happens next; The bulls clearly have control and will be looking for a breakout-pullback above the resistance trend-line or a trap-low below the prior support levels to avoid buying high tomorrow.  The one thing that concerns us this evening is that the week started with a gap from Friday evening's close and the day started with a strong move lower which was quickly erased back to fill the gap.  Furthermore, once the gap was filled the pullback to the moving-average was bought but failed to re-test the highs which isn’t what you would have expected from such a strong move higher.  This subtle clue tells us that sellers may be entering this market now with a target to go back to the lows tomorrow and they need to get to it quickly if they want a decent chance to sell.  Sellers will be looking for a break down and then hold the pullback to the moving-average before this market gets too close to the battle zone support at 13128 tomorrow.

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