January 21, 2011
- in Uncategorized by schooloftrade
Morning Day Trading Prep for Crude Oil, Gold, Euro and Dollar Index Futures
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
There are no US or international news events planned for today.
Days without economic news events are expected to see relatively light volume as traders will not have anything to trade against.
Friday’s are always great trading days for us in the live trade room. We look for early volume for trading opportunities before 11am est, making sure we take our profit early so we don’t fall victim to the Friday chop and slop which sets in earlier than normal.
Lets begin by looking at the Dollar Index Futures
The dollar index is trading in a very similar range from Wednesday and Thursday this week, and without any news events planned for today we may not see this price move very much from here, we will wait and see.
Looking at the ways we use the dollar index, I can see three scenarios today:
– Dollar rises off these lows up into the price channel above us
– Dollar stays trapped under the channel and continues to trade sideways
– Dollar drops, breaking support and creating new lows
We will use a negative Dollar Index Futures Correlation to make educated trading decisions today.
If the dollar rises, we expect other markets to fall, and visa versa.
If the dollar rises back up, im looking for selling opportunities on the markets we trade.
If the dollar stay sideways today, trapped at these lows, we can expect to see the markets we trade stay sideways and choppy.
If the dollar drops to new lows im looking for buying opportunities on the markets we trade.
You can apply this to the gold, crude oil, euro, and most any market you want to trade.
Crude Oil Futures
Crude oil was a major mover for us on Thursday, we earned some amazing profit selling those highs from 93.00 on Wednesday and Thursday. Even our auto trader got in on the fun.
New we see crude oil futures trading at new lows…but are they really?
Looking at the 34-range chart on the crude you can see we are trading at the lows of the larger trading range.
It appears that crude fell from the sky, but it really just tested the same lows from January 11-12
With that said, lets look at our options for crude oil today:
– We see two trading ranges: the long term and the short term
– Sell the highs of the short term range from 90.00 down
– Buy the lows of the short term range at 89.00
– We are in the middle of the long term range
– Avoid the middle of the trading range, so swing traders need to use caution right now until we re-test the highs or the lows of the long term range.
Main focus will be to Buy the lows, sell the highs, and avoid the middle of the short term trading range.
If the dollar rises back up today, looking good for selling opportunities at the highs of this sideways range.
If the dollar drops today look to Buy a Pullback at support when we break above 90.22
Gold looks pretty sloppy this morning, after its big drop from Wednesday and Thursday we find the gold looking for more direction at this new Swing Low
Similar to crude oil, im looking at the trading ranges on gold first.
Notice the Wedge Pattern that was recently broken to the downside below 1355.
Whenever we break a wedge pattern like this we have a few different possible scenarios:
– We make new highs today and go back up into the wedge pattern
– We go sideways inside this narrow trading range below the wedge
– We make new lows, breaking this sideways range to the downside.
I really need to see new lows made for us to feel convinced that the sellers really have gold on the run to the downside.
Im going to expect the gold to want to rise, so look for the dollar to make new lows for opportunities to use a price reversal pattern to buy the support levels on gold as it rises back up.
Scalpers and day traders can trade inside this narrow range if the gold doesn’t move much today.
If the dollar rise, expect gold to fall to new lows, and remember that we need to be careful not to sell the lows. We always look to Sell a Retracement at resistance levels on the way down.
The euro continues to trade at the highs of the trading range.
We have three scenarios to consider:
– Euro rises to new highs
– Euro stays sideways at this highs
– Euro makes new lows
Looking at the price action at these highs, comparing with the dollar we can easily see that buying the highs will be a challenge because of the lack of confidence we see in the price action.
double top at the highs tell us that the best options right now may be to sell the highs or if we do rise up we can Buy a Pullback at support to take advantage of a falling dollar.
Look for the 2-step pattern to sell the highs like we’ve done twice already this week on the 21-range charts.
Buy support when the euro falls to new lows, and remember that the dollar index will have a strong correlation so look for speed by Reading the Tape on the dollar for confirmation on euro trades.
I will review ALL of this in our live trade room today @ 800am est.
