For the Week of September 10, 2012
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:
December 2012 Japanese Yen
The December 2012 Japanese Yen market has established a Pennant Formation with touches to the upside at 1.2920 (6/01/12), 1.2848 (8/01/12), and 1.2804 (8/31/12) and to the downside at 1.2298 (4/20/12), 1.2438 (6/25/12), and 1.2565 (8/20/12). Friday’s (9/07/12) lower than expected jobs numbers and subsequent sell-off in US Dollar futures triggered a rally in the Japanese Yen. The market traded, but did not close, above the upper trend line. A close above the upper trend line will trigger an entry to the upside. It appears the market will need to settle at 1.2800 or higher for confirmation of a breakout. Trend Seeker (A US Chart Company tool) shows the market is in an Downtrend however. It may take a close above the recent highs for the Trend Seeker to flip to an Uptrend.
December 2012 Kansas City Wheat
The December 2012 Kansas City Wheat market has been range bound since the summer drought rally subsided. Since July 16, the futures market has traded between 874’0 and 957’2. A series of highs and lows have formed both Channel and Pennant Formations. The market settled on Friday (9/07/12) at 923’2, closer to the top of the range than the bottom. The Trend Seeker is Neutral which lines up with the past six weeks trading activity. The Trend Signal Ranking (another US Chart Company tool) is Bullish however. The indicator is anticipating a breakout to the upside. A close above the 957’2 (7/19/12) high and Trend Seeker flipping to an Uptrend will trigger an entry to the upside. Both the MACD and Stochastic indicators will need to flip to bullish signals for additional confirmation.
December 2012 Cotton
The December 2012 Cotton market has developed a Flat Top Triangle Formation. This formation is made up of a series higher lows and a series of failed tests of a resistance level. The resistance level to the upside is roughly 77.50. That price was tested at least five times over the past three weeks. With Trend Seeker already in an Uptrend an aggressive approach would be to purchase the contract on a pull back to the lower trend line. This level is about 75.30. However, I am looking at a more conservative approach and a close above the 77.49 (8/21/12) high. Both the MACD and Stochastic indicators will need to flip to bullish signals for additional confirmation as well.
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