For the Week of August 26, 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 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 again selling off to create a lower low, and the Head of the formation, on August 5 at .8823. The contract rallied and made a new high at .9217 (8/19/13) creating a neckline along with the high of .9284 (7/24/13). The Right Shoulder was formed by the low on August 22 at .8918. A breakout above the neckline 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 rather neutral and below the baseline. The Stochastics, a Momentum indicator, is near the “over sold” level. The ADX, another Momentum indicator, reads 18.88, but in a uptrend. 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 long. A potential stop loss can be placed below the 50-Day Moving Average (.9118) or a 20-Day Exponential Moving Average (.9068). Potential targets can be the highs of .9593 (6/14/13) or .9719 (6/03/13).
The December 2013 Chicago Wheat contract is trading along a downward sloping trend line. There are touches at 730’6 (6/19/13), 705’6 (7/11/13), 679’6 (8/02/13), 678’4 (8/05/13), and 658’6 (8/21/13). A break above the trend line will trigger an entry to the upside. Though for trade confirmation, Trend Seeker (a US Chart Company tool to help identify market trend) must change to Up from its current Down trend. That may take a break out through the 50-day Moving Average (672’4). The MACD, a trend indicator, is bullish below the baseline. Stochastics, a Momentum indicator, is bullish as well. The Average True Range, a Volatility indicator, is weak, but pointed bullish. A potential stop loss is the twelve month contract low of 635’4 (8/14/13). A potential upside target is the resistance level at 758’2 (5/03/13).
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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