For the Week of March 24, 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 May 2014 Heating Oil contract is setup for trade to the upside using the Momentum Entry Technique (M.E.T.). The Stochastic indicator is bullish, just above the “over sold” level. The Relative Strength Index is flat, just below the 50.00 breakout level (44.25). Both of these are Momentum indicators. A break of the 3/21//14 high of 2.9446 triggers the entry to the upside as long as Momentum is bullish. MACD, a trend indicator, is currently bearish. The Trend Seeker (a U.S. Chart Company tool to help identify market trend) is down as well. The contract bounced off a lower trend line last week, confirming a lower support level. A stop loss can go below this level, or recent lows, if that is too much risk in relation to the reward. An upside target is the 3.0640 (3/03/14) high. Which is also a point on the upper trend line.
The July 2014 Soybeans contract is setup for a trade to the downside using the Momentum Entry Technique (M.E.T.). Ending last week, the Stochastic indicator crossed over to bearish. The Relative Strength Index headed down toward the 50.00 breakout level (55.35). Both of these are Momentum indicators. A break of the 3/12/14 low of 1350’2 triggers the entry to the downside as long as Momentum turns over to bearish. MACD, a trend indicator, is currently bearish. The Trend Seeker (a U.S. Chart Company tool to help identify market trend) is up however. The contract made a short-term Double Top at 1429’0 (3/07/14). A stop loss can go above this high or recent contract highs. A downside target is the support level near the 1230’0 price range. This is a target of over a full dollar or $5,000.
The May 2014 Soybean Oil contract is potentially forming a 1-2-3 Bottom Formation. The number one point is the twelve month contract low of 37.14 (1/31/14). The number two point is the March contract high of 44.62 (3/06/13). The contract retraced past the 50% Fibonacci Retracement of the last rally (41.10) to 40.72. This low sets up the number three point of the formation if it does not trade any lower nor below the twelve-month contract low. If the low holds up, a break of the number two point triggers a long entry opportunity to the upside. The MACD, a trend indicator, is bearish. Stochastics, a Momentum indicator, is bearish as well. A 20-day Exponential Moving Average is bearish, while the 50-day Exponential Moving Average is bullish. The Trend Seeker (a US Chart Company tool to help identify market trend) is currently neutral, but a 1-2-3 Bottom Formation is a trend reversal formation. The current price is far enough away from the breakout price to allow time for the technical indicators to line up. However, if they do so before the breakout, look for an early entry opportunity. A potential stop loss would go below the number three point of the formation,
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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