For the Week of March 17, 2014
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 June 2014 Canadian Dollar contract established a 1-2-3 Bottom Formation. In addition, a Pennant Formation, which sets up an earlier long entry opportunity. There are touches on the upper trend line at .9138 (2/19/14) and .9106 (3/06/14). There are touches on the lower trend line at .8885 (1/31/14), .8910 (2/21/14), and .8945 (3/12/14). In regard to the 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 close above the upper trend line 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. However, a 1-2-3 Bottom Formation is a trend reversal formation. For a Pennant Formation breakout though the trend must be Up. Stochastics, a Momentum indicator, is relatively flat. A 20-day Exponential Moving Average and 50-day Moving Average are converging and a cross-over is a bullish signal. An upside target is the .9400 price level, near the December contract highs, an area of potential resistance. A potential stop loss can be placed below the twelve-month contract low.
The May 2014 Heating Oil contract has also established a Pennant Formation, setting up a short entry opportunity. There are touches on the upper trend line at 3.0209 (8/26/13), 3.0700 (12/27/13), and 3.0640 (3/03/14). There are touches on the lower trend line at 2.7685 (5/01/13), 2.8393 (11/07/14), and 2.8848 (3/17/14). A close below the lower trend line triggers an entry to the downside. The MACD, a trend indicator, is bearish above the baseline. The Trend Seeker (a US Chart Company tool to help identify market trend) is currently Down. Stochastics, a Momentum indicator, is bearish but in the “oversold” territory. A 20-day Exponential Moving Average and 50-day Moving Average are converging and a cross-over of this type is bearish. A long-range downside target is the first touch on the lower trend at 2.7685. A potential stop loss can be placed on the other side of the lower trend line which could act as potential resistance.
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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