For the Week of August 19, 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:
Let’s review three currency markets
The September 2013 Australian Dollar contract set up an Inverted Head & Shoulders Formation. For an Inverted Head & Shoulders Formation, imagine a person standing on its head. The Left Shoulder was formed by the low on July 12 at .8957. The contract traded higher before once again selling off to create a lower low, and the Head of the formation, on August 5 at .8823. The contract rallied to .9200 (8/12/13) creating a neckline along with the high of .9284 (7/24/13). The Right Shoulder was formed by the low on August 15 at .9039. A breakout above the neckline (which occurred during Friday’s trading session) triggers a long entry. However, the Trend Seeker (a US Chart Company tool to help identify market trend) is Down and must change to Up for trade confirmation. The MACD, a trend indicator, is bullish already, below the baseline. A 20-day Exponential Moving Average is leaning bullish as well. The Stochastics, a Momentum indicator, is near the “over bought” level. The ADX, another Momentum indicator, reads 20.03, but in a down trend. There appears to be plenty of resistance between the .9200 and .9300 price level. Along with the change in Trend Seeker, a shift in Momentum would be ideal as well before entering the market. A potential stop loss can be placed below the low of .9039 (8/15/13). Potential targets can be the highs of .9593 (6/14/13) or .9719 (6/03/13).
The September 2013 Canadian Dollar contract is set up for a breakout to the upside. The contract is trading along a downward sloping trend line with touches at .9955 (5/09/13), .9749 (7/31/13), .9724 (8/09/13), .9719 (8/12/13), and .9708 (8/16/13). A close above the upper trend line will trigger an entry to the upside. The Trend Seeker (A US Chart Company tool to help identify market trend) is Up. The MACD, a trend indicator, is choppy above the baseline. This coincides with the contract trading near the 20-day Exponential Moving Average and 50-day Moving Average. Stochastics, a Momentum indicator, is choppy as well, though below the “over bought” level. RSI, another Momentum indicator, reads 49.88, below the overbought level of 70. A potential stop loss can be placed below the 50-day Moving Average (.9637) and recent lows. Another potential stop loss can be placed below the pivot point of .9564 (8/07/13). A potential target is the first touch on the trend line at .9955 (5/09/13).
The Japanese Yen contract is set up for a breakout to the upside using the Momentum Entry Technique (M.E.T.) A break of the 1.0440 high (8/08/13) triggers a long entry. The Trend Seeker (A US Chart Company tool to help identify market trend) is Up, with a Strong ranking. The contract has found support along an upward sloping trend line with touches at .9852 (7/08/13), .9916 (7/19/13), .9940 (7/22/13), .9958 (7/24/13), .9957 (7/25/13), and 1.0002 (7/25/13). The MACD, a trend indicator, is choppy above the baseline. The market is trading above a 20-day Exponential Moving Average and 50-day Moving Average. Stochastics, a Momentum indicator, is choppy as well. RSI, another Momentum indicator, reads 53.70, below the overbought level of 70. A potential stop loss can be placed below the low of 1.0312 (8/09/13). Potential targets can be the highs of 1.0669 (6/13/13), 1.081 (4/02/13), or 1.1017 (2/25/13).
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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