For the Week of January 07, 2013
The Trade Spotlight advisory service applies the GBE trading methodology (buying or selling commodity contracts based on breakouts of chart formations and technical indicators) to identify one to two trade setups per week.
Highlighting This Week’s Potential Breakouts:
February 2013 Gold
The Gold market can be volatile. A great example of this volatility occurred during last week’s trading activity as the market dealt with the end of the 2012 trading year, the beginning of the 2013 trading year, the Fiscal Cliff and FOMC notes. The February Gold contract traded as high as 1695.4 and as low as 1626.0 last week. The 1626.0 low from Friday touched a lower trend line. Other touches on this trend line include the lows of 1718.0 (9/13/12), 1677.0 (11/02/12), and 1636.0 (12/20/12). A break below this trend line (which sets up as 1624.0 for Monday’s trading session) will trigger an entry to the downside. As volatile as this market can be you can take a conservative approach waiting for a close below the lower trend line, but that may be too late to enter a position. The trend is lower according to the Trend Seeker (a US Charts Company tool to help identify market trend). The MACD indicator is bearish but below the baseline. However with the ADX indicator strong at 31.87, there can still be plenty of Momentum to the downside. In fact, the Stochastic indicator is bearish and still above the “oversold” territory. There are plenty of target areas going back to lows in the 1500’s between May and August of last year. The February 2013 First Notice Day (FND) is January 31 and the Last Trading Day (LTD) is February 26. If the market does not break the trend line by mid-January we will turn our focus to the April 2013 contract.
March 2013 Soybeans
The March 2013 Soybean contract continues its sell-off since mid-September 2012. There is an opportunity to short futures on a break of the 1356’0 low (11/16/12). The market tested but failed to break that low on Friday (1/04/12). The trend is Down according to the Trend Seeker. The MACD indicator is bearish, but below the baseline. The Stochastic indicator is bearish, but in the “oversold” territory. The ADX indicator is still strong at 27.56 however so there may still be Momentum to the downside. A potential target is the 1230’0 low (5/23/12) and a potential stop loss is above the 1400 level. This will setup about a 3 to 1 reward to risk ratio. Keep in mind Friday, January 11, major crop reports will be released, as well as the market remains focused on the South American weather conditions. If in a position we will monitor and adjust stop losses and targets accordingly.