Thursday, October 20, 2016

5 Trades for OPEX Friday | SchoolOfTrade Newsletter 10/20/16

“In essence, if we want to direct our lives, we must take control of our consistent actions. It’s not what we do once in a while that shapes our lives, but what we do consistently.” 
Notes for Tonight’s Newsletter:
Crude Oil is bearish with a spike & channel, E-mini S&P is trading in the middle of a range, Gold is range bound and trading below the range, and the Euro is bearish and trading with a spike & channel this evening.

Crude Oil is bearish with a spike & channel this evening but we're seeing the sellers struggle to finish off the measured-move which tells the sellers its most likely time to take their profit and wait for a chance to re-enter this market up at overhead resistance levels tomorrow for a more reliable opportunity back down again.  The sellers have control, but after two attempts to push through the lows they appear to be running out of gas, which means they should be prepared for either a short-term range or a strong break lower for a run to the measured-move.  Sellers would love to either sell back at the projected range-high or look for the breakout-pullback below the GAP at 50.44.  Buyers, on the other hand, have zero proof right now and need to wait for a strong break higher and then hold a pullback, but its going to be a big challenge for the bulls with all the overhead resistance waiting for sellers to keep shooting for that $50 target tomorrow.

E-mini S&P is trading in the middle of a range this evening and the recent pendulum swing below the range tells us to be looking for a move higher before we get the opportunity to sell the highs back down to the lows.  Our plan for a trading range is to buy low, sell high, and avoid the middle while focusing on failures to get into the moves, and keep an eye on explosive breakout moves because those will likely be the sign of a new trend to follow. 

Gold is range bound and trading below the range, just a few ticks above a multi-day, un-tested reversal-line, which tells us that buyers will be looking for the pendulum to swing back to the highs of the range and sellers will need to see another strong move lower in order to get the confirmation they need of this breakout.  Our goal is to buy low, sell high, and avoid the middle of the range, which means we want to be looking for buying opportunities going back into the range.  The sellers, on the other hand, may read this strong move lower as a potential breakout, but looking back in time we can see that 1265 is an un-tested reversal line which plan a key role in moving lower tomorrow.  Sellers need to see another strong break down and then hold below 1265 if they want to convince us that this is a bearish trend, rather than a trap at the low of a range.

Euro is bearish and trading with a spike & channel this evening but we have a few simple clues that tell us the bears may have a difficult time finishing-off the double-down target tomorrow.  First, the 10,000 ‘round number’ in the middle of the chart will most likely continue to act like a magnet.  Second, we can see the news this morning sent prices racing higher above the round number, only to collapse back down in almost perfect symmetry.  Third, price is currently holding the high of the bear channel, which is big clue that buyers may be trying to dig their heels in and send this price back to 10,000 and possibly all the way back up to the high from earlier today.  Sellers have control, and the spike and channel tells them to look for traps and failures up at the resistance levels overhead, for a target going back to re-test the low.  With that said, that is exactly what the buyers will be looking for, except they will want to see the pullback hold above the moving-average for an easy shot back to 10,000.

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