May 2, 2011
Day Trading Morning Prep Gold, Crude Oil, Dollar Index, Euro, E-mini Russell Futures
‘We are what we repeatedly do. Excellence, therefore, is not an act, but a habit’ – Aristotle
Let’s begin our morning routine with the economic news for today’s trading session.
8:20 Gold & Currencies OPEN
9:00 Crude Oil OPEN
9:30 US Market OPEN
10:00 ISM Mfg Index
10:00 Construction Spending
11:00 Transition into Lunch
11:30 European Close / Live Webinar in our Trade Room
All eyes appear to be on the U.S. this morning as news reports that Osama Bin Laden has been killed.
We have news to watch at 10am today, so we will read tape around this time looking for opportunities to trade.
It will be interesting to see how the markets will react to this news today, and as always, I’m watching the speed or the orders coming into the market along with average true range (ATR) to find the best times to trade the markets today.
My trading method will work on ANY liquid market, but here is what im focused on day trading today:
Crude Oil Futures
| Crude Oil 34Range |
Open your 89-range chart on Crude Oil this morning and you see the following:
– Dropped below the bullish channel from last week, but price has made a higher low, which gives us a clue that price will likely get back into this bullish channel.
– With the news overnight about Osama Bin Laden, and looking that anytime this has happened in the past there has been MORE concerns over supply/demand of crude oil, this would be expected (fundamental analysis of this market)
– New highs and new lows have created a bullish price wedge pattern, which we will use to trade inside of today
– We also see two sideways trading ranges, and we will use these as our guide as well.
– Now lets use a faster timeframe, open the 34range chart and you begin to see much more detail, and we can put together a specific plan of attack:
o We have CAD news @ 830am today which MAY spark the market into some early morning movement
o There is no clear dollar trend, so no dollar correlation bias today at this point (that may change)
o Trading @ the OPEN at 830am est tells us to beware of sloppy price action with low volume
o This further confirms our assumption that traders will be looking for more clues before committing client capital.
o We’re just above the PLOD and the PHOD is all the way up around 114.14
o This tell us to be bullish in nature today, we are at the lows of the previous range and we expect the market will TRY to test the highs of the range.
o This means the higher % trades will be buying pullbacks, using support to buy as prices are rising.
o Major levels above us are the OPEN, the HOD at 113.09, and then 114.14 the PHOD are all major levels of resistance overhead we will use to sell first, and then with rising prices will buy pullbacks above them.
o Major support below us is the lows of the wedge at 111.00 but beware this is a big round number so trade with caution
o We also have the PLOD below us as support, but at this point in the morning we are going to use this PLOD as a level that tell us SENTIMENT.
§ Example: are we above or below the PLOD? We may not be able to use this as a major level of support to enter/exit trades.
o The Big Money Trigger Line is another big Red flag that we need to be patient this morning. The BMT is right at 112.34 right where we are trading at this time.
§ We don’t like to enter trades around the BMT, we would rather have your profit target at the BMT.
– With that said, our plan of attack on Crude Oil Today will be as follows:
o We will look for more volume around 830am (right now)
o We will buy the lows and sell the highs of the sideways ranges marked in white boxes
o Buy the lows and sell the highs of the Price Channel marked in Pink trend lines
o Buy the lows and sell the highs of the price wedge in the blue trend lines
o We will be buying above the PLOD, and then look to sell the PHOD as resistance
o If price rises we will look for buying opportunities using pullbacks, keeping an eye out for the OPEN at 112.80 but trying to buy the lows of the price channel around 112.75
o I will also look to sell the HOD at 113.09 as price rises, and then look to buy pullbacks with new higher highs
o I will not buy the highs, I will buy pullbacks
o If prices fall I’m looking to buy the PLOD as support, and buy support levels of 112.0 and 111.00 on the way down.
o If prices fall we assume we will try and enter into the short term bearish trend it was in earlier this morning, so im looking to sell new lows with a retracement.
o I will not sell the lows, I will wait to sell a retracement
o I also know that around the BMT I will need to be very careful, so patience may be the best trade I can take.
