For the Week of February 04, 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 Silver
The March 2013 Silver 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 29.860 (1/07/13), 30.150 (1/11/13), 30.745 (1/28/13), and 30.850 (1/29/13). There are touches on the upper trend line at 34.490 (11/29/12), 32.485 (1/23/13), 32.300 (1/30/13), and 32.160 (2/01/13). The Trend Seeker (a US Chart Company tool to help identify market trend) for March 2013 Silver is Neutral. The ranking is also Neutral meaning Trend Seeker is anticipating neither a bullish nor bearish move. In addition, the chart is approaching the apex of the Pennant Formation. By default the market will breakout above or below one of the trend lines at some point in the near term. A trade signal will not be confirmed until the Trend Seeker flips to an Up or Down trend with a subsequent chart breakout in that direction. Both a 20-day Exponential Moving Average and 50-day Moving Average are keeping with the neutral theme as both prices are converging. It appears both the MACD and Stochastic indicators are signaling a bullish move however.
March 2013 British Pound
Thanks in part to the Bank of England potentially taking aggressive steps to avoid a risk of recession, the March 2013 British Pound contract has a chart formation setup. A break of the 1.5670 (1/28/13) low will trigger a short entry using the Momentum Entry Technique. The Trend Seeker (a US Chart Company tool to help identify market trend) is in a Down trend with a Strong ranking. The MACD and Stochastic indicators both exhibit signs of a bearish market with the potential to continue its price slide. The ADX is quite strong with a 28.91 reading. Expect to trail stop losses quickly if Momentum continues to push prices lower. An initial stop loss can be placed above the Friday high with a potential risk of 205 points or the 1/25/13 high of 1.5823 with a potential risk of 154 points . The potential downside target is the twelve month contract low of 1.5360 (5/31/12).
March 2013 Chicago Wheat
The March 2013 Chicago Wheat market is setup for a Momentum Entry Technique breakout. A break below the 763’0 (1/24/13) will trigger a short entry. The Trend Seeker (a US Chart Company tool to help identify market trend) is in a Down trend with an Extreme ranking. This move to the downside may coincide with the seasonal “February Break” trading pattern. The MACD indicator is still bullish but this is a lagging indicator. The Stochastic indicator already displays a strong bearish market. Support may come in at the 736’2 (1/11/13) low, but with ADX at 20.10 Momentum could carry this market to the 700’0 price level. A initial stop loss can go above the 1/31/13 trading high of 791’0.
This material is conveyed as a solicitation for entering into a derivatives transaction.
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