For the Week of September 24, 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:
October 2012 Sugar
The October 2012 Sugar contract has formed a 1-2-3 Bottom Formation. The twelve month contract low was made on 9/6/12 at 18.81, this set up the number one point of the formation. The market rallied to 20.25 (9/14/12) setting up the number two point of the formation. The market retraced to 18.93 (9/19/12) stopping short of the contract low and has traded higher since. That low sets up the number three point of the formation. While there was a surge in trading volume as the first two points of the formation were made, there seems to have been a drop off the last couple sessions. If volume, and subsequently momentum, picks up look for a breakout through the number two point. Trend Seeker is currently Down but this is a trend reversal formation.
October 2012 Live Cattle
The October 2012 Live Cattle contract lows are trading along a lower trend line, touching at 119.60 (7/18/12), 123.350 (8/28/12), 125.050 (9/17/12), and 125.525 (9/21/12). A close below the lower trend line will trigger a sell entry. It appears the market will need to settle at 125.600 or lower for confirmation of a breakout. The Trend Seeker is currently Neutral. Perhaps it will take a break below the low of 125.05 (9/17/12) or even 123.350 (8/28/12) for the Trend Seeker to flip, providing confirmation to the downside. The 200-day moving average (126.475) and recent highs (126.725) could act as resistance and a natural level for stop losses. The downside target could be the twelve month low of 119.500 (4/27/12). The MACD indicator crossed over to sell signal already.
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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