Monday, August 28, 2017

5 Secrets to Trading “GAPS” | Crude Oil, Emini, Nasdaq, Gold & Euro

“Life does not get better by chance. It gets better by change.” 

Crude Oil is bearish and trying to re-test today’s low, but this rising support trend-line is making our job more difficult, telling us to wait for buyer-failure in the ‘battle zone’, or look for traps down near the lows.

S&P just got clobbered with a monster “gap down” at the overnight open, but today’s session ended with a triangle, so we’re watching to see the sellers try twice for buying opportunities back into the range tomorrow. (if not, a move to last week’s low)

Nasdaq is bearish after a big “gap down” this evening, which tells us to keep our eyes open for clues, such as “Acceptance” or “rejection” to help us plan our trades accordingly tomorrow.

Gold is bullish with a Spike & Channel, telling us to look for a deep, ‘2-legged pullback’ down into the ‘battle zone’ for a target going to the “triple-up” waiting overhead.

Euro is bullish and trying to break free of a triangle, which tells us to avoid chasing the move higher, waiting for the '2-Try Rule' and seller-failure below the moving-average for a re-test of the high.

Crude Oil Trading Strategy
Crude Oil is bearish and trying to re-test today’s low, but we have a rising support trend-line telling us to focus on selling high, or wait for a trap off the low tomorrow.

The bears had a strong move lower today, which tells us that any pullback off these lows will be seen as a selling-opportunity back down to the lows.

The goal is to use overhead resistance, such as the prior week low and the ‘battle zone’ to avoid selling too close to the trend-line, or we have to wait until we get below the trend-line for additional selling-opportunities with traps.

E-Mini S&P Trading Strategy
E-Mini S&P is range-bound with a triangle, but this recent “gap down” tells us to wait for more information before trading tomorrow.

Any time we see a gap like this we’re looking for either price “acceptance” or “rejection”, which always takes a little patience to play out on the chart.

First, the session ended in a range today, so the odds are high we return back to that range (rejection).  The plan is to use the '2-Try Rule' for seller-failure to buy back up into the range tomorrow.

Second, if we see price “acceptance” down here, we’re expecting a Spike & Channel with a target going back to last week’s low.

E-Mini Nasdaq Trading Strategy
E-Mini Nasdaq was bullish and trying to re-test today’s high, but this recent “gap down” just killed any confidence for the buyers until we see more information.

At this point, we need to wait for “acceptance” or “rejection” at these lows, which means we’re looking to see if the sellers continue this price lower, or if they see this as a range and avoid selling at the lows.

This will most likely develop into either a Spike & Channel or a Trading-Range tomorrow, all we need is a few more candles and we can go from there.

Gold Trading Strategy
Gold is bullish with a Spike & Channel as it gaps ABOVE the “triple-up” target and hunts for the quadruple-up target tomorrow.

Any time I see a Spike & Channel I always look for a deep, ‘2-legged pullback’ off the highs, into support levels such as the ‘battle zone’, with a target going back to re-test the high.

One thing to keep an eye on tomorrow is the possibility of a failure and return back down to fill the gap.  We need to see proof of the reversal first, but if we do, watch that 1300 round-number and 96.5 weekend gap as a seller target.

Euro Trading Strategy
Euro is bullish on low volume, and today’s session began inside a triangle (range), which means we will likely see this market return to that range at some point in tomorrow’s session.

The trend is clearly bullish, so trying to SELL up here isn’t very reliable (although that is an option).  I would rather wait for a deep pullback and look seller-failures and a re-test of today’s high.

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