For the Week of November 18, 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 January 2014 Natural Gas contract has formed two parts of a three part 1-2-3 Bottom Formation. Establishing the number three point, then breakout of the number two point will trigger a long entry. The number one point of the formation is the twelve-month contract low of 3.465 (11/05/13). The contract has since rallied as high as 3.713 (11/15/13), the current number two point of the formation. If the market proceeds to sell-off, but not below the twelve-month contract low, a number three point is established. A 1-2-3 Bottom Formation is a trend reversal formation. The Trend Seeker (a US Chart Company tool to help identify market trend) is currently Down with a Weak ranking. MACD, a trend indicator, is already bullish below the baseline. A 38.2% Fibonacci Retracement (3.705) and recent highs may act as strong resistance. Therefore, a breakout, with an increase in Momentum, may contribute to the continuation of a rally. Stochastics, a Momentum indicator, is currently bullish below the “over sold” level. RSI, another Momentum indicator, is just below the 50.00 level at 47.17. However, as the number three point must first establish before a trade trigger confirmation, these indicators are likely to change. A potential stop loss will be determined if/when a number three point is established. A potential upside target is the high of 4.125 (9/19/13).
The January 2014 Heating Oil contract has the potential to break out to the upside. A close above a downward sloping trend line, a break of the 2.9882 (10/31/13) high, and the crossover of a 20-day and 50-day Moving Averages, would all together trigger a long entry. There are touches on the trend line at 3.2001 (8/29/13), 3.0560 (10/16/13), and 3.0422 (10/22/13). The top point of the trend line of 3.2001 would be the potential upside target. The Trend Seeker (a US Chart Company tool to help identify market trend) is currently Down with a Weak ranking. MACD, a trend indicator, is already bullish below the baseline. Stochastics, a Momentum indicator, is currently bullish below the “over sold” level.
The January 2014 Unleaded Gasoline contract is setup for a breakout to the upside through a Momentum Entry Technique (M.E.T.). A break through the session high of 2.7003 (10/16/13) will trigger an entry to the upside. The contract broke through the last the M.E.T. trigger point (2.6316), but the Trend Seeker (A US Chart Company tool to help identify market trend) was Neutral. Therefore there was no long entry trigger. The Trend Seeker must change to Up for a trigger confirmation. The MACD, a trend indicator, is already bullish below the baseline. Stochastics, a Momentum indicator, is just the “over sold” territory, perhaps being oversold was one reason behind the retracement during Friday’ session. A 20-day Exponential Moving Average is pointed upward below the current market price. A crossover with the 50-day Moving Average is also a bullish signal. A potential upside target is the 2.8726 (8/26/13) twelve-month contract high.
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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