For the Week of October 14, 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 December 2013 British Pound contract is set up for a potential breakout to the downside. There is trend line with touches at 1.4798 (7/09/13), 1.5094 (8/02/13), 1.5420 (8/28/13), 1.5906 (10/10/13), and 1.5915 (10/11/13). A close below the trend line will trigger a new short entry. In addition, a break through the 50% retracement (1.5862) of the last rally (8/28/13 to 10/01/13), will provide further confirmation. The Trend Seeker (a US Chart Company tool to help identify market trend) is currently Neutral. The MACD, a trend indicator, is bearish. A 20-day and 50-day Moving Averages are currently flat. The Average True Range, a volatility indicator, is also flat. The Relative Strength Index, a momentum indicator, is just at the 50% level. If the contract breaks out, perhaps momentum and volatility will surge as well. A potential stop loss is above the Friday high and 20-day Exponential Moving Average of 1.5994. An initial target is the low of 1.5420 (8/28/13).
The December 2013 Japanese Yen contract is range bound within a Pennant Formation. There is an upper trend line with touches at 1.1000 (2/26/13), 1.0670 (6/13/13), and 1.0357 (10/08/13). There is a lower trend line with touches at 0.9675 (5/22/13) and .9943 (9/11/13). The Trend Seeker (a US Chart Company tool to help identify market trend) is Up, but with a Weak ranking. The MACD, a trend indicator, is neutral. A 20-day and 50-day Moving Averages are currently flat. The same goes for Average True Range, a volatility indicator, and the Relative Strength Index, a momentum indicator. This contract is setup for writing options, both calls and puts, to collect premium. December options have 53 days until expiration.
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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