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Notes for Tonight’s Newsletter:
We're back to the action after last week's Quadruple Witching and with the FOMC Announcement only two days away we're seeing a lot of trading ranges on the charts this evening which means we have a plan for tomorrow's session. Crude Oil and the S&P are both trading at the lows of their ranges, Gold is trading in the middle of a triangle and the Euro is trying to develop into a trend but may also fail back into its range as well. No matter what happens tomorrow, we have a great plan of attack!
Crude Oil is bearish and trading at the low of a possible range this evening which means sellers need to beware trying to sell into the lows and buyers need to see some more proof before they can start buying the lows. The spike and channel is the most important clue for the sellers, which tells them to look for traps above the prior swing highs or they need to get a strong breakdown below last Friday's 43.44 low to continue the move lower. Buyers on the other hand, need to be aware that any move higher will likely be sold initially so they need to see a successful breakout that can hold a pullback for a move back to the highs tomorrow.
E-mini S&P is also trading at the lows of a possible range this evening which means buyers will be looking for opportunities to take price back to the highs and the sellers will be trying to run price down to fill the gap from last Friday’s low at 2123. The bear channel and the rising support trend-lines are two important clues to work with tomorrow. Sellers have control and will need to see a strong breakdown below the rising support trend-line and with enough conviction to drive out the buyers who are waiting at 2127.75. Buyers on the other hand, need to see a strong enough push higher to be able to hold a pullback above the highs of the bear channel for a move back to the highs.
Gold is trading in the middle of a triangle this evening which tells us to treat this as a range until proven otherwise. Buyers will be looking for seller-failures at the lows, sellers will be looking for buyer-failures at the highs and everyone should be avoiding the middle until we can see a strong enough breakout in one direction to catch a new trend, which ahead of the FOMC Announcement on Wednesday, may not happen anytime soon. Sellers have control, and they will be looking for buyer-failures above the resistance levels overhead and will need to resist the temptation to sell the breakdown because it will most likely be a trap. Buyers on the other hand, will be looking to fade the move lower and buy off seller-failures going back to the triangle middle and must resist the temptation to buy a new higher-high because it too will likely be a trap.
Euro is bullish and buyers are trying to re-test the highs and complete the measured-move tomorrow while the sellers are looking for the battle zone to fail for a move back to fill the gap from last Friday's low. The buyers have control and will be looking for a successful breakout-pullback to fill the gap overhead and re-test the highs. Sellers on the other hand, need to see a strong breakdown below the battle zone so they can sell the next retracement for a target back to the lows tomorrow.
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