Monday, March 6, 2017

Trading a Fake-Out Breakout | SchoolOfTrade Newsletter 03/06/17

“The Pessimist Sees Difficulty In Every Opportunity. The Optimist Sees The Opportunity In Every Difficulty.”

Crude Oil is bearish and trying to finish off a measured-move, but one key level of support is not only holding things up, but also telling us exactly where to be looking for the next selling-opportunity tomorrow.

S&P is bearish, but trading in the ‘No Trade Zone’ tells us to stay patient and look for one of two options for tomorrow.

Gold is bearish, but multiple levels of support are giving us two specific areas we need to watch for selling-opportunities tomorrow.

Euro is bearish after a strong move lower today, but the way today’s session closed, right at the lows, is telling us that we need to wait for proof tomorrow before selling more.

FDAX is range bound this evening, but one simple clue is of BIG concern tomorrow, and will have us looking for opportunities just outside the range.

Crude Oil
Crude Oil is bearish and trying to re-test today’s low, but a rising support trend-line is holding up the sellers from finishing the move.  The bears took control just before the end of the morning session today, and now they are in pullback mode, waiting for sellers to enter the market at higher prices.  Sellers will be wise to avoid selling into this support trend-line, knowing that a buyer-failure up inside the ‘battle zone’ or a successful breakout-pullback below the trend-line will be the most reliable selling-opportunities tomorrow. 

E-Mini S&P
E-Mini S&P is bearish and trying to finish rotation back to the low of the range, and possibly a “pendulum swing” and measured-move target tomorrow.  The bears took firm control of this market from the very first candle of today’s session with a spike & range.  The bears lost interest in ‘selling low’, price corrected up above the high of the range, and now the sellers are riding the move back down again.  Assuming you didn’t grab the buyer-failure at the high, we need to avoid trading in the middle of this range, and now look for selling-opportunities at the high and the low of the range tomorrow.

Gold is bearish and trading at the low of a bear channel, just a few ticks above the Double-Down target.  The bears have control, but will be concerned with selling this low, knowing that the most reliable selling-opportunities will up at the highs of the channel, while avoiding the measured-move tomorrow.  This is an interesting situation this evening; the bears need to get a correction, but that will put price above the measured-move, and if price pushes lower, we see the prior day low is waiting below, so we need to be careful chasing this move lower as well.

Euro is bearish and trying to finish rotation of a wedge this evening, but the sellers are making it quite clear that they are weary at the moment to be selling this low.  The bears had a strong move lower this morning, we saw the sellers take their profit, price corrected, and they ran price back down to re-test the low again, just like clock-work.  Now, as we sit at the low of the range, we’re looking for proof that these sellers want to keep going, or proof that they are rejecting lower prices and we will look for a move back up to the high of the range for the next round of selling-opportunities tomorrow.


FDAX is trading sideways inside a range this evening, which tells us to use range rotation to sell the high with buyer-failures, buy the low with seller-failures, and avoid the middle of the range tomorrow.  One thing that stands out on this chart is how few candlesticks there were today, signaling that this market is trading on very low volume ahead of the rollover, which is scheduled later this week on the 9th.  Low volume tells us to be careful with this market tomorrow because big moves can happen when we’re not paying attention, so always use a stop and trade smaller position sizes until the volume comes back to normal again.

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