Day Traders prep for Consumer Confidence as Commodity Markets make new highs from Monday

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The James’ Report: Professional Resources for Professional Traders

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– Crude Oil Futures transition at the highs of Monday’s trading range. Buying pullbacks above 82.24, selling off below 81.54

– Gold is bullish above Monday’s Highs, buying pullbacks above 1651.0, Outside Day

– Euro Futures trading inside Monday’s Range, Selling at 1.3563 resistance, if we make it above will look to buy pullbacks.

– Mini Russell is bullish this morning, trading above the previous HOD of 665.5. Buying Pullbacks above Monday’s highs, if we fail will sell the failure below the PHOD.

– Sentiment improves amid hopes that Europe is working on a deal that will improve capitalization of banks and leverage the EFSF

– German confidence holds steady

– European shares continued to rally after policy makers in Europe are making more efforts to deal with the crisis in the Eurozone. An option being discussed is the European version of the TARP where a ‘bad bank’ would be created to buy the toxic sovereign debt. This and other options are being discussed. Meanwhile banks led the rally on improved sentiment.

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Today’s Economic News:

Day Traders will begin the day today with 9:00 Case Shiller Home Price Index, followed by the 10:00 Consumer Confidence report. We also have the Richmond Fed Manufacturing Index at 10:00am which will have crude oil moving.

Weakness in today’s consumer confidence report would, together with jobless claims this Thursday, point to trouble for next week’s monthly employment report (Nonfarm Payrolls)

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Looking at the Charts:

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Euro futures has three price structures:

– Outside Day

– Price Wedge

– Bull Price Channel

Outside Day and the Bull Channel both have the same market personalities, they tell us to look for breakouts, buying pullbacks with new higher highs and buying at support as price pullbacks off those highs.

Price wedge has a complete OPPOSITE personality. It tells us to sell the highs as price rises, and look for fake-out breakouts. This is very different than the first two price structures.

The Price Wedge is the most important until we are told differently. If we see support levels hold during pullbacks we then can feel confident that we’ve ‘broken’ the price wedge.

Our plan of attack will be quite simple. We need to use the wedge first, and then when we see the pullbacks hold, rather than collapsing into the wedge below, we then know the price action is bullish and we can start aggressively buying now.

If price rises im aware of the fake-out breakout with a price wedge so im trading with caution when using wave patterns at the new highs.

If the buyers can hold above the PHOD 1.3563 we then see this as bullish and we will then buy pullbacks with new higher highs.

It does feel like this has a fake-out breakout written all over it.

As price rises im selling at resistance first, and then if that resistance breaks, i then look to buy a pullback.

I will sell the highs of the bull channel if we make it up that high today.

If price falls im selling aggressively below the PHOD as a FAILURE of the Outside day.

I am selling aggressively below the highs of the price wedge, sell the highs of the wedge.

I will buy the bull channel lows at 1.3500 as major support. If price breaks through the channel lows i will then buy the support below the channel at 3486, 3475.

If we break thru the 3475 support I will then consider the sellers in control and will sell retracements down to the 3420 which is major support from our 89range chart.
The Crude Oil Futures have three price structures:
–        Outside Day (transition)
–        Bull Price Channel
–        Price Wedge
We use the price wedge first, so we are looking for fake-out breakouts above the highs of the wedge.
The bull channel and the outside day both tell us to expect big moves with breakouts to the up side. However, the price wedge is more important first, so we look for the sellers at the highs to fail and then we can proceed using the bull channel as our guide buying new higher highs with pullbacks.
My plan of attack on crude oil is to sell as price rises and then above 83.14 we should be ok to start buying pullbacks considering the wedge will be broken.
If we end up back below the PHOD we then look at the sellers in charge so we want to be selling below 82.24.
If price rises im selling at resistance until we break above 83.14 and then I will wait to see the sellers fail and then with strong buy pressure I will buy a pullback up to 84.00.
If price falls i will sell aggressively below the PHOD 82.24 down to 81.83 and 81.54. I will take profit at these levels of support, and then with new lows below these major support levels we will start selling retracements with new lower lows.