Tuesday, March 28, 2017

‘Spike’ Trading Strategy | SchoolOfTrade Newsletter 03/28/17

“I have not failed.  I’ve just found 10,000 ways that won’t work.  There is no such thing as failure, only results.”

Crude Oil is bullish, but a resistance trend-line and a measured-move are making this difficult for them to keep control, and we know that sellers are most likely looking for an opportunity to sell into the highs as we speak.

S&P is bullish, but a spike & channel on the chart, combined with a resistance trend-line are both giving the bears an easy window of opportunity to take control tomorrow.

Gold is bearish, but an overshoot of the channel is telling us to stay patient, and look for selling opportunities using the reversal-line and ‘battle zone’ overhead.

Euro is bearish with a strong ‘spike’ lower, which tells us to stay patient for a ‘trap high’ around the moving-average and watch for one of four likely scenarios tomorrow.

FDAX is bullish, but the recent ‘trap low’ gave the bulls the opportunity they needed just a few hours ago, so our plan is to wait for a correction or look for a breakout-pullback.

Crude Oil
Crude Oil is bullish, but this falling resistance trend-line, in combination with this measured-move are going to make this difficult for the bulls to keep control of this market.  The bulls had an easy session this morning with a bull channel that pulled back to the moving-average and shot higher to finish with a measured-move.  After the bulls got their measured-move, we have a series of lower-highs, which is quickly closing the door on the bulls and opening the door for the bears.  The only way the bulls will get the confidence they need is on a strong push through the highs, but if they don’t, watch for the sellers (who we assume are already putting on positions) to be looking for opportunities to sell into this high.

E-Mini S&P
E-Mini S&P is bullish, but such a strong move higher, combined with the spike & channel are giving the bears and opportunity to take control and make a run back to the trading-range where the session began.  The spike & channel is a big clue this evening; the channel is larger than the spike, which often leaves the market open for a big correction lower, which gives the bears the opportunity they need to take control and send it lower.  Sellers need to see price ‘trap high’ so they can sell into buyer-failure and the buyers need to get back above this resistance trend-line and hold a pullback.

Gold is bearish with a big overshoot of this channel low, telling us to avoid chasing the move lower, and look for opportunities to ‘sell high’ using traps around the moving-average, the channel, and the ‘battle zone’ as the sellers try and fill the weekend gap which is still left open.

Euro is bearish with a strong spike lower to fill the weekend gap, but now prices are way too low to be selling, so our plan is to look for a correction back to the moving-average, most likely a trap-high, and then a re-test of the low.  The ‘spike’ lower is a big clue, telling us to expect a spike & channel, spike & wedge, spike & range, or flag pattern tomorrow.  Based on what we see in the first few hours of tomorrow’s session, we can trade accordingly.


FDAX is bullish after a strong run higher to finish today’s session.  The first thing that stands out on this chart is that the buyers just got a ‘trap low’ and sent price back up to new highs, which means we would describe this market as being quite expensive right now, and our plan will be to look for a deep pullback into the ‘battle zone’, or proof that the bulls are looking for more, using a breakout-pullback to new highs.

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