For the Week of January 14, 2013
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:
March 2013 Swiss Franc
The March 2013 Swiss Franc contract has formed a Pennant Formation. A Pennant Formation consists of two converging trend lines in a market with consolidating prices. There are touches on the lower trend line at 1.0563 (11/16/12) and 1.0760 (1/04/13); with nearby touches at 1.0555 (11/12/12), 1.0678 (12/07/12), and 1.0799 (1/10/13). There are touches on the upper trend line at 1.1026, (12/20/12), 1.1013 (12/27/12), and 1.0998 (1/02/13). Friday’s session high (1.0986) traded above the upper trend line only to close below it. The Trend Seeker (a US Chart Company tool to help identify market trend) is Up with an Extreme ranking. A close above the upper trend line (1.0975 for Monday’s trading session) will trigger a new long entry setup. The Stochastic indicator agrees with the bullish sentiment as it’s crossed over and below the “over bought” territory. The market is trading above both a 20-day Exponential Moving Average and 50-day Simple Moving Average. The 20-day Exponential Moving Average (1.0882) appears to be half way of the Pennant Formation’s range, while the 50-day Moving Average (1.0787) is running along the lower trend line. The MACD indicator is bullish but above the base line. The ADX is above the 20.00 level at 21.48. Momentum could potentially carry this market to the price level it found itself last year in February 2012 (1.1270). That price could be a potential upside target.
March 2013 Sugar
The March 2013 Sugar contract has formed a 1-2-3 Bottom Formation. This is a trend reversal formation. Currently the trend, according to the Trend Seeker, is Neutral with a Bullish ranking. The Trend Seeker is anticipating a reversal in trend to the upside. The number one point of the formation is the twelve month low of 18.31 (12/13/12). The market rallied to make a new short-term high at 19.75 (1/02/13). This high did not surpass the previous short-term high of 20.03 (11/20/12) thus setting up the number two point of the formation. The market proceeded to sell-off to 18.52 (1/09/12). This low failed to surpass the twelve month low and number one point of the formation thus setting up the number three point of the formation. A break of the number two point (along with favorable technical indicators) triggers an entry to the upside. A break of that high would also result in a breakout above an upper trend line with touches at 20.03 (11/20/12), 19.94 (12/03/12), and 19.75 (1/02/13). The MACD indicator looks primed to cross over to bullish, below the baseline. The Stochastic indicator has crossed over to bullish above the “over sold” territory. Momentum is lacking currently, the ADX reads 14.03. However, by the time the market nears the number two of the formation the indicator may reflect an increase in Momentum.
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