For the Week of October 29, 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 Euro Currency
The December 2012 Euro Currency contract was trading along an upward sloping trend line. There were touches at 1.2069 (7/24/12), 1.2160 (8/02/12), 1.2285 (8/15/12), 1.2309 (8/17/12), 1.2320 (8/20/12) and 1.2926 (10/24/12). The market closed below the trend line on Friday (10/26/12) triggering a short entry. However, the Trend Seeker (a US Chart Company tool) is currently Up but the ranking is Weakest. The market price is currently below the 20-day exponential moving average but above the 50 day simple moving average. Perhaps it will take a break below the recent low of 1.2813 and 50 day simple moving average (1.2847) for the trend to flip, providing the downside confirmation. The MACD and Stochastic indicators crossed over to bearish signals.
December 2012 Cocoa
The December 2012 Cocoa contract is approaching the October low of 2338 (10/12/12), a potential support level. The Trend Seeker is Down and the ranking is Strong. The market price is below both the 20-day exponential and 50-day simple moving averages. The MACD is bullish but appears ready for a cross over signaling a bearish trend. The cross-over would occur below the baseline though, perhaps signaling a move with less momentum. Regardless of the degree of momentum, a break of the support level could see the market sell-off to a support level below 2200.
December 2012 Lean Hogs
The December 2012 Lean Hogs contract has made an interesting pattern since the twelve month low (70.050) was tested on September 7, 2012. Twice there was a rally followed by a pull back to previous resistance. Currently the market looks setup replicate a similar pattern. A break of the 79.800 (10/19/12) would trigger a long entry based on the Momentum Entry Technique. The Trend Seeker is Up and the MACD and Stochastic indicators crossed over to bullish signals. Potential stop losses could be placed below the last pull back (77.625). The potential upside target could be a pivot point at 82.300 (7/09/12).
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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