For the Week of February 24, 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 look ahead to June 2014 currency contracts.
The June 2014 Australian Dollar contract is trading range bound, setting up a Channel Formation. The top of the channel is the .9070 (11/26/13) high. The low of the Channel is the .8586 (1/24/14) low. However, most of the resistance to the upside is near .9000 and most of the support to the downside is near .8750. This contract sets up for the Neutral Market Strategy which involves “writing” (selling) a call and a put on either side of resistance and support. The goal is to collect premium on both sides as the contract continues its sideways trading pattern. A 20-day Exponential Moving Average and 50-day Simple Moving Average are flat. MACD, a trend indicator, is flat above the baseline. Stochastics, a Momentum indicator, is flat in the “over bought” territory. In keeping with the mixed bag of indicators, the Trend Seeker (a U.S. Chart Company tool to help identify market trend) is down. Potentially a trade sets up to “write” calls first and then “write” the puts if the market retraces, potentially to the 50% retracement level of the Channel at .8828.
The June 2014 Canadian Dollar contract established a 1-2-3 Bottom Formation. The number one point is the twelve-month contract low of .8885 (1/31/14). The number two point is the February contract high of .9138 (2/19/13). The contract pulled back to .8910 (2/21/14), this low sets up the number three point of the formation. A break through the number two point triggers an entry to the upside. The MACD, a trend indicator, is bullish below the baseline. The Trend Seeker (a US Chart Company tool to help identify market trend) is currently down. Though, a 1-2-3 Bottom Formation is a trend reversal formation. Stochastics, a Momentum indicator, is relatively flat. A 20-day Exponential Moving Average and 50-day Moving Average are both angling downward. For trade confirmation, the technical indicators must exhibit Momentum to the upside. An upside target is the .9400 price level near December contract highs, an area of potential resistance. A potential stop loss can be placed below the twelve-month contract low.
The June 2014 Swiss Franc contract is setting up a Flat Top Triangle Formation. There is currently just one touch on the upper trend line, the twelve-month contract high of 1.1323 (12/17/13). There are three touches on the lower trend line at 1.0946 (1/21/14), 1.1056 (2/05/14), and 1.1084 (2/21/14). This is a bullish formation, though it would be a stronger trade opportunity if the market tests, without breaking, the twelve-month contract high multiple times. The MACD, a trend indicator, is bullish above the baseline. The Trend Seeker (a US Chart Company tool to help identify market trend) is currently up. Stochastics, a Momentum indicator, is in the “over bought” territory and appears to be rolling over to the downside. If this is the case and the contract sells-off a another point is established on the upper trend line at 1.1312. A 20-day Exponential Moving Average is bullish and crossed over the 50-day Moving Average.
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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