Obligatory Sideways Churn

Some of us suspected a post short squeeze candle churn fest and that’s exactly what we got today. But as the old saying goes – no pain – no gain! Today’s inside day candle may just be what Dr. Evil ordered:

We had some jokster drop by and make bold bearish predictions today. I’m glad some among you are able to tell the future – maybe you’d be better off playing the lottery. I for one really don’t care which direction this things will take as I plan to bank coin either way. The way to do that is by sticking with your charts and time tested setups. Which today means an inside day candle plus an NR4 day plus a reversal of a NLBL. Now that’s a setup I can sink my rodent teeth into!

The game plan here is simple – a breach of today’s highs would not only be a NLBL confirmation but also an inside day break out, followed by confirmation if we see a push above yesterday’s highs.  A breach of today’s lows may get us in a whole number of configurations but taking out a small short position would definitely be on the menu. Again, we don’t try to predict the future here – the tape will tell us what it wants to do.

Let’s catch up with some of our previous setups:

Sugar – last Friday I proposed an inside day + NR4 setup. We got a tiny fake out attempt this morning which cost me a few ticks before I took it off the table. now long as we breached the upper boundary. This one may try to shake us out so don’t take on too many positions so that you can ride out the early gyrations. You should know the program at this point – the tape will try to fake you out before it picks a direction and runs away. Catch me if you can.

Copper – so far so good – the short is holding up but has reversed upwards a little. I would not be surprised if we had to flip this sucker tomorrow, so keep an eye on it.

Cotton is looking good – you may recall the two entries last week. Tuesday we had an inside day + NR4 and that got faked out but I pointed toward support at the NLSL and that held up nicely. We are now nicely in the plus and may just get out of this sideways channel from hell. That was the plan all along but it’s not making it easy. Again – catch me if you can when it finally breaches the event horizon.

Crude – similar story but it made it a bit easier for us. Nice ID + NR4 candle on Thursday. Friday we got a first touch of the NLBL and we breached it today. If you took a short position on Friday you should have flipped it by now as the NLBL is expected to add as support. Again, I would not be surprised to see a NLBL retest here, so don’t overextend yourself – keep your exposure limited and you won’t get nervous if she tries to throw you out of the saddle. Of course that doesn’t give you a license to bend the rules – if we drop below the NLBL by more than a few ticks then it’s back to the old drawing board.

EUR/AUD is no fun and I am back in cash – awaiting further instructions. Hey, we can’t get ’em all…

CAD/JPY – so far so good – the NLBL retest was a short opportunity as it never closed above. We may see a retest here as well – it’s summer and nasty things happen, so be disciplined with your stops and don’t get emotional.

AUD/USD – still at the 100-day SMA. Frankly this could go either way so I’m just going to roll with the punches here. The fact that we keep sticking near that SMA is slightly bullish and perhaps we finally get a break out here. But if we drop below by more than a few pips then I’ll flip this sucker in a jiffy.

Two more setups for my subs – sorry, all I could dip up today. I don’t make the tape – I just report it!
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Gold – a theoretical ID + NR4. BUT obviously we can’t play this by ID rules so I would only take a long here if we breach today’s highs tomorrow. Stop would be below the open or maybe a few ticks added for good measure. But I’m not going to over think this either – no setup is worth putting too much work into. Either she flies or she doesn’t.

Dollar – my favorite setup of the day. Nice touch of the NLSL, thus far she’s holding. I would be long here until ole’ bucky tells me otherwise. Yes, that means flipping it to a short if we drop below. Again, this could go either way and I’m not taking sides here – the ambivalent trader banks the coin.

Cheers,