Wednesday, September 28, 2016

OPEC Trading Strategy | SchoolOfTrade Newsletter 09/28/16


"A goal is not always meant to be reached. It often serves simply as something to aim at." - Bruce Lee. 
Notes for Tonight’s Newsletter:
We heard from Janet Yellen and OPEC today which means we have some serious movement on the chart this evening which is going to give us some great trading opportunities going into Thursday;  Crude Oil is bullish and trying to push through the highs of a channel, E-mini S&P is bullish and trading at the highs of a bull spike & channel, Gold is bearish but the sellers are walking on very thin ice, and Euro is range-bound after the sellers had an easy session selling off the highs from last night's newsletter.


Crude Oil is bullish and trying to push through the highs of a channel this evening after news broke late this afternoon about a production freeze agreement at OPEC.  In most situations, when we hear from OPEC we get a few days of action and then price returns back to where it all began, but the end of the month is on Friday and we have Augusts' high up at $49.97 so this could definitely get interesting over the next 48 hours.

With that said, we want to prepare for three (3) scenarios tomorrow, bullish, bearish, and sideways.  Typically, moves like these find sellers at the highs and end up trading sideways with a bull-bias, but we will be ready for all options.  First, buyers will need to see a breakout move to new highs on enough strength to get the pullback to hold above the double-up resistance.  Second, if the buyers can’t get price pushing high enough, we then look for a range to develop and we focus on buying the low of the range using traps.  Third, if the buyers take profit at the highs the sellers may get a shot at a big move back to where this all began down at the reversal line at 45.80 tomorrow but they need to hold a pullback below 46.70 first and then we can start thinking about selling.  The one thing we do NOT want to do tomorrow is try to call a top of this market, the only selling we will be doing at the highs will be taking profit on long positions.

E-mini S&P is in a similar position to Crude Oil this evening, reacting bullishly to the news from OPEC this afternoon and trading at the highs of a bull spike & channel which tells the buyers to be looking for a strong breakout-pullback above the channel highs, or wait for a pullback to the correction zone and try to use the reversal line at 2158 for a move back to re-test the highs.  The sellers on the other hand need to find a way to break down and hold below the 2158 reversal line and then go for the battle zone and triangle support down at 2154.  One thing to keep an eye on is the prior month closing price at 2167 because the end of September is only 2 days away and asset-managers will be watching that level closely to gauge who we end the month-over-month comparison.  I won’t be surprised at all if the market finds a range around the 2167 as we go into Friday's close of the month.

Gold is bearish but the sellers are walking on very thin ice right now after a major double-overshoot of the channel low and a key rising support trend-line that isn’t giving the sellers any room to try and re-test the lows.  This is a great example where the lack of options for the sellers will likely give way to a big opportunity for the buyers if they can hold this pullback and make a run back for the highs, the only obstacle will be the high of the channel, which will make for an excellent breakout-pullback if they can get there tomorrow.  Sellers on the other hand need to get below the support levels in the way and that is going to be hard without some serious strength to the downside overnight.


Euro is range-bound after the sellers had an easy session selling off the highs from last night's newsletter and with a recent test of the range highs we know that sellers will be looking for buyer-failures to sell back down to the lows and buyers will be looking for a strong enough breakout to buy the pullback on the way up to a measured-move target waiting overhead.  Remember the rules of the range; buy the bottom third, sell the upper third, and avoid the middle third like the plague until we get a strong enough breakout tomorrow that can hold a pullback and find a new trend direction.

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