For the Week of March 25, 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:
May 2013 Unleaded Gasoline
I was monitoring the May 2013 Unleaded Gasoline contract for a Trend Line breakout. The touches on the lower trend line were at 2.7651 (12/13/12), 3.0315 (3/01/13), and 3.0881 (3/18/13). The contract traded through and closed below the lower trend line on March 19. However, the Trend Seeker (a US Chart Company tool to help identify market trend) was not Down, negating a short entry. Sure enough the market retraced back to the lower trend line. With the market heading lower once again, the trend has changed to Down according to Trend Seeker. Using the Momentum Entry Technique, a break below the low of 3.0151 (3/20/13) will trigger a short entry. The MACD and Stochastic indicators are both bearish. Trading volume has increased over the past few trading sessions. Momentum has declined but the ADX is still above the 20.00 level at 22.13. Trading ranges in this market can be large and volatile, look to trial stop losses intra-day if necessary. A potential downside target is the support level around 2.9000.
May 2013 Canola
The May 2013 Canola contract has potentially found support along a lower trend line. There are touches at 569.4 (1/11/13), 603.4 (2/27/13), 615.0 (3/04/13), 617.1 (3/18/13), and 620.0 (3/21/13). The contract has potentially found resistance just below the 638.1 (2/22/13) high. In fact, Friday’s high traded the same price before closing lower. The contract almost sets up a Flat Top Triangle Formation. The Trend Seeker is Up with an Extreme ranking. The MACD indicator appears to be crossing over to bullish but above the baseline. The Stochastic indicator is bullish and below the “over bought” territory. ADX (Momentum) is below the 20.00 level at 16.38, though a new long entry will not be triggered until the market closes above the 638.1 (2/22/13) high. Potential stop losses can below the lower trend line. There may be resistance around the twelve month contract high at 644.7, but after that the upside is wide open. The market all time high occurred in March 2008 at 720.3.
May 2013 Sugar
The rally and potential turn around in May 2013 Sugar was short-lived. The market broke out in a big way on March 7, then traded sideways for six trading sessions before selling-off again. The contract is holding a lower trend line with touches at 17.67 (2/15/13), 17.88 (3/01/13), 18.13 (3/21/13), and Friday’s low of 18.15. The close on Friday was 18.17, the trend line may be in jeopardy come Monday. The Trend Seeker is Up but with a Weak ranking. The MACD and Stochastic indicators disagree with the Trend Seeker as they are pointing bearish. If the Trend Seeker changes to a Downtrend and the contract closes below the trend line a new short entry will be triggered. A potential stop loss can go above the recent contract high of 18.49 (3/21/13), which is also above a 50 day Simple Moving Average (18.44) and 20 day Exponential Moving Average (18.41).
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