Tuesday, October 18, 2016

7 Trades for Wednesday | SchoolOfTrade Newsletter 10/18/16

“A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty.  What’s your position?”
Notes for Tonight’s Newsletter:
We have some great opportunities going into Wednesday's session after some big moves to finish up today's session.  Crude Oil is roaring higher after the inventory report, the E-mini S&P is trading with a bullish spike & range, Gold is bullish and trading inside its own range, and the Euro is consolidating around the big round number ahead of the ECB Report later this week.

Crude Oil is bullish and trying to hold above the highs of today's range after this evening's API Report sent prices roaring higher.  The bulls clearly have control, and this type of move off news usually results in a second leg higher, which has a target up at 51.45 tomorrow if the bulls can hold this.  We can also see the news gave us a 'spike', and most spikes result in a spike & channel or a spike & range so we will be looking for that in the short-term the overnight session develops.  With so much strength we can assume that buyers will be looking to buy any pullback to support, and some bulls may even buy now and just hold a wide stop, but the most reliable opportunity for the bulls will be on the next pullback.  Sellers on the other hand cant mess with this type of move, and their best option will be to wait and see if the next pullback can get below the range-high and then look for a move back down to the 50.63 measured-move area which is where the 'news reaction' got started.

E-mini S&P is range-bound with a bullish spike & range, which tells us to focus on selling the highs, buying the lows, and avoiding the middle of the range with the emphasis on waiting for failures at the extremes for the best moves going in the opposite direction.  We're currently trading at the lows of the range which means we're looking for sellers to fail so we can buy back up to the highs.  Once we return the highs, we will look for the buyers to fail and sell back down the lows.  In the event of an attempted breakout of the range we need to see enough strength to get the moving-average outside the range and then look for the pullback from there.

Gold is bullish and trading at the highs of a range this evening which tells the buyers to look for a breakout-pullback above the measured-move at 66.3 or wait for a full rotation back down to the lows where they can buy using seller-failures tomorrow.  Sellers on the other hand would love to see the buyers get caught buying into the highs and then sell back down to the lows.  Once back to the lows, the sellers will then be looking for a strong breakout-pullback that can hold below the low of the lazy bull channel.

Euro is bearish and trading inside a range, right on top of the measured-move and 10,000 round-number this evening.  The bears have control with what resembles a 'spike & range' which tells the sellers to beware selling the low of the range because there are multiple levels of support waiting down there and to focus on selling failures up above the range at locations such as the top of the bear channel and the battle zone.  Buyers on the other hand need to wait for a strong breakout-pullback that can hold above both the high of the channel and the battle zone for a move back to re-test the high tomorrow but the key word is STRENGTH for the buyers because that 'round number' is likely going to have traders fading this move back down until we hear from the ECB on Thursday morning.

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