For the Week of September 17, 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 Soybean Oil
The December 2012 Soybean Oil contract has potentially formed a 1-2-3 Top Formation. The contract made a new 12 month high on September 4 at 58.60. This high sets up the number one point of the formation. The market pulled back to 55.68 on September 12. This low sets up the number two point of the formation. Friday, September 14, the contract traded as high as 57.80. If this price holds, it would setup the number three point of the formation. The market sold-off in the afternoon and on the close, so it’s likely the market continues to sell-off into Monday’s session. A break of the number two point of 55.68 would trigger an entry to the downside. There was a surge in trading volume on days when the first two points of the formation were established. Currently the Trend Seeker (a US Chart Company tool) is Up. This trend could reverse if the market trades through the support level near the number two point. A potential stop loss could be the number 2 point of the formation. Potential targets could be the 51.88 low (8/8/12) or the twelve month low of 48.64 (6/15/12).
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 (9/14/12) at 948’0, near the top of the range. The Trend Seeker (a US Chart Company tool) is Neutral which lines up with the past seven 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 are displaying bullish signals.
STOP ORDERS DO NOT NECESSARILY LIMIT YOUR LOSS TO THE STOP PRICE BECAUSE STOP ORDERS, IF THE PRICE IS HIT, BECOME MARKET ORDERS AND, DEPENDING ON MARKET CONDITIONS, THE ACTUAL FILL PRICE CAN BE DIFFERENT FROM THE STOP PRICE. IF A MARKET REACHED ITS DAILY PRICE FLUCTUATION LIMIT, A "LIMIT MOVE", IT MAY BE IMPOSSIBLE TO EXECUTE A STOP LOSS ORDER.
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