For the Week of October 08, 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 US Dollar Index
The December 2012 US Dollar Index has formed a 1-2-3 Bottom Formation. The twelve month contract low was made on September 14 at 78.725, this set up the number one point of the formation. The market rallied to 80.250 (10/01/12) setting up the number two point of the formation. The market retraced to 79.180 on Friday (10/05/12) stopping short of the contract low. If this low holds, it would set up the number three point of the formation. In addition, there is a downward sloping trend line with touches at 84.610 (7/24/12) and 83.070 (8/20/12). There are two near-touches at 83.945 (8/02/12) and 81.950 (9/05/12). The number two point of the formation also fell short of touching the trend line. A close above the trend line would trigger an entry to upside at the same time as the 1-2-3 Bottom Formation breakout. The MACD indicator crossed over to a buy signal, however the Stochastic indicator crossed over to a sell signal. The Trend Seeker (a US Chart Company tool) is currently Down. There is no trigger until there are upside confirmations.
December 2012 Coffee
The December 2012 Coffee contract had back-to-back massive losing sessions. From the opening price of October 5 to the closing price on Friday (10/06/12) the market fell 13.35 points. There is potential for a continued sell-off of over 11.00 points. A break of the 167.65 (9/24/12) low and support level could see the market test the September contract low of 156.55 (9/06/12). The contract twelve month low of 153.70 (6/18/12) would not be far off. MACD and Stochatics indicates a continuation of the sell-off. On Friday (10/05/12) the market closed below the 50-day Moving Average of 171.03.
December 2012 30 Year Treasury Bond
The December 2012 30 Year Treasury Bond contract is trading along a downward sloping trend line. There are touches at 151’29 (9/04/12), 154’17 (7/25/12), and 150’06 (10/03/12). A close above the trend line would trigger a buy entry. It appears the market will need to settle currently at 150’00 or higher to close above that trend line. The Trend Seeker is currently Down and the ranking is Extreme with the sell-off on Friday (10/05/12) after the unemployment numbers were released. Perhaps it will take a break above the high of 151’29 (9/04/12) for the Trend Seeker to flip, providing the upside confirmation. The upside target could be the twelve month high of 154’17 (7/25/12). A close above that high would trigger another entry to the upside based on the Hi-Lo Breakout Formation. The MACD indicator remains a bullish, however the Stochastic indicator crossed over to a sell signal. The market is approaching the 200 day moving average of 146’26, so there may be further downside movement.
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