Thursday, April 20, 2017

Trading the Fake-Out Breakout | SchoolOfTrade Newsletter 04/20/17



“Once you have mastered time, you will understand how true it is that most people overestimate what they can accomplish in a year – and underestimate what they can achieve in a decade!”


Crude Oil is bearish with a wedge, but we have four levels of support on the chart for tomorrow, so our plan is to look for a ‘2-legged correction’ to sell high.

S&P is bullish and trying to re-test last week’s high, but we have three major resistance clues on the chart that we need to address first.

Gold is trading inside a range this evening, so our plan is fade the edges, but a recent change in market sentiment is telling us to be prepared for a possible bullish breakout tomorrow.

Euro is bearish with a Spike & Channel this evening, but we have two levels of support telling us to beware chasing this strong move lower, and look for a ‘trap high’ up at resistance overhead. 

FDAX is bullish with and trading at the high of a Spike & Channel this evening, and we have two clues on the chart telling us to make sure we buy as low as possible tomorrow to avoid a fake-out breakout.



Crude Oil Trading Strategy
Crude Oil is bearish with a wedge, trading at the measured-move and prior day low support levels this evening.  Just as we discussed on last night’s newsletter, today was a great example of a market that rewarded traders for ‘selling high’, and our plan is to do more of the same tomorrow.  The wedge measured-move, prior low, and wedge are all major support levels we need to avoid, so the plan is to look for traps, failures, and ‘2-legged corrections’ to sell up at resistance levels tomorrow.

E-Mini S&P Trading Strategy
E-Mini S&P is bullish and trying to re-test last week’s high before we hit the weekend, but we have some resistance levels that demand our attention first.  The big concern is this falling resistance trend-line, which tells us we need to get back above the trend-line and then use it as support for a breakout-pullback move higher.  Next, we need to worry about this Double-Up, which is a major objective for the bulls from early today.  Finally, the trading-range is a great clue, telling us to look for price to pull back a little further so we can really ‘buy low’ for a move back to the high.

Gold Trading Strategy
Gold is trading at the high of a range this evening as it tries to finish rotation back to the high of a megaphone pattern.  Our plan for a trading-range is always the same; buy the low with seller-failures, sell the high with buyer-failures, and avoid the middle like the plague.  One thing that stands out on the chart is the recent higher-low, giving us a clue that a bullish breakout may be waiting tomorrow for an attempt at the prior week high.  With that said, we need to see some serious STRENGTH from the buyers before we consider anything, and even then, we need to look for a ‘trap low’ to avoid chasing the move.

Euro Trading Strategy
Euro is bearish with a Spike & Channel this evening, just a few points above the Double-Down and prior day low.  Price got tossed around like a rag-doll this morning, but managed the finish the session with a strong move lower, which appears to be forming a spike & Channel.  Our goal is to sell high tomorrow up around the high of the channel, and up at previous swings overhead, keep an eye on a target down at the prior week high.

FDAX Trading Strategy

FDAX is bullish with and trading at the high of a Spike & Channel this evening, telling us the most reliable buying opportunities will come back down at the lows of the channel.  One thing that stands out on this chart is the prior week low at 12070.  We know that prior week levels tend to act like magnets on Friday, so the plan is to buy low and use that magnet to our advantage, and avoid chasing moves higher to avoid a fake-out breakout.

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