For the Week of July 15, 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:
The September 2013 30-Year T-Bond contract made a new contract low at 132’02 on July 8. Since, the contract has retraced towards a downward sloping trend line. There are touches at 148’28 (5/01/13), 148’17 (5/03/13), 142’15 (6/06/13), 140’28 (6/14/13), 140’20 (6/17/13), and 139’27 (6/19/13). A close above the trend line will trigger a long entry. The MACD indicator has turned bullish, well below the baseline. The Stochastic indicator has also turned bullish, below the “over bought” territory. A 20-Day Exponential Moving Average has turned upwards as well. The Trend Seeker (a US Chart Company tool to help identify market trend) is currently Down with a Neutral ranking. A break of the recent contract highs perhaps will coincide with a change in the Trend Seeker to the Upside. A potential stop loss can be placed below the twelve month contract low of 132’02 (7/08/13). Potential upside targets can be either points on the trend line to fit a proper risk/reward ratio.
The December 2013 Coffee contract is range bound in a Channel Formation. The top of the range is 129.70 (6/14/13) and the bottom of the range is 120.50 (6/20/13). The Trend Seeker (a US Chart Company tool to help identify market trend) is Down and with an Extreme ranking. The MACD indicator is bullish below the baseline but the Stochastic indicator is choppy, currently bearish. The ADX indicator, a Momentum gauge, is strong with a reading of 37.28 (20.00 is typically the baseline). The contract may rally in either direction upon the breakout. An aggressive trade is to place a working stop order just above or below the range, entering the contract on the breakout. In that situation the other working stop order will act as the stop loss. A conservative approach is to wait until the contract closes above or below the range and then enter the market the following trading session.
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.
This material is conveyed as a solicitation for entering into a derivatives transaction.
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