For the Week of May 12, 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 November 2014 Soybeans contract setup a Trend Line Formation. A close below the lower trend line triggers a short entry. The touches on the trend line are the lows of 1088’2 (1/31/14), 1165’4 (3/31/14), and 1215’2 (5/07/14). The MACD, a trend indicator, is bearish and above the baseline. The Trend Seeker (a US Chart Company tool to help identify market trend) is currently neutral, with a bearish ranking. For trade confirmation, the Trend Seeker must be down. Stochastics, a Momentum indicator, is strong to the downside. A 20-day Exponential Moving Average is bearish and 50-day Moving Average is bearish. A crossover of these Moving Averages, which could occur below the trend line, is a bearish indicator. On Friday, on the USDA report, the market made a new short-term low at 1210’4. An entry order can be worked a breakout through this low. A downside target is the first point on the lower trend line. The market may have found resistance near the 1231’6 price level last week. This level is also an area of resistance going back to March through July. A potential stop loss can be placed above 1232’0.
The July 2014 Cotton contract setup a Trend Line Formation similar to Soybeans. A close below the lower trend line triggers a short entry. Currently the contract is trading below the trend line. The touches on the trend line are the lows of 77.74 (11/22/13). 85.67 (2/27/14), 90.02 (4/11/14), 90.73 (4/23/14), and 92.00 (5/09/14). The MACD, a trend indicator, is bearish and above the baseline. The Trend Seeker (a US Chart Company tool to help identify market trend) is currently neutral, with a neutral ranking. For trade confirmation, the Trend Seeker must be down. Stochastics, a Momentum indicator, is strong to the downside. A 20-day Exponential Moving Average is bearish and 50-day Moving Average is bearish. A crossover of these Moving Averages, which could occur near the trend line, is a bearish indicator. Downside targets can be the points on the lower trend line with the first target at 85.67. A stop loss can be placed above a pivot point at 95.10 (5/02/14), though the potential risk of loss is close to 350 points.
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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