For the Week of June 02, 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:
Let’s review two short-term potential currency trades. June contracts go off the board the third week of June.
Australian Dollar
On 5/2/14, the June 2014 Australian Dollar contract made a pivot point low at .9175. This low did not take out previous contract lows in late March/early April, nor has the contract traded below that level since. A break of this low sets up a short entry trigger using the Momentum Entry Technique (M.E.T.). The Trend Seeker (a U.S. Chart Company tool to help identify market trend) is down. The MACD indicator, a trend indicator, is also bearish. Evaluating Stochastics, momentum is strong to the down side as well, above the “over sold” level. A 20-day Exponential Moving Average is about to cross over a 50-day Moving Average. If that cross over occurs, this is a bearish signal. Risk about 100 points by placing a stop loss above recent contract highs and the 50-day Moving Average.
Canadian Dollar
The June 2014 Canadian Dollar contract may have found resistance at .9240 (5/08/14) as it was tested, but failed to surpass that high as of 5/30/14. There is a lower trend line with touches at .8845 (3/20/14), .9133 (5/21/14), and .9142 (5/22/14). A close below this trend line will trigger a short entry opportunity. The Trend Seeker (a U.S. Chart Company tool to help identify market trend) is up. Currently a trade to the downside would be against the trend. The MACD indicator, a trend indicator, appears to be rolling over to bearish though. The Stochastic indicator, a momentum indicator, is strong to the down side, above the “over sold” level. A 20-day Exponential Moving Average is pointed bearish, while a 50-day Moving Average is pointed bullish. A cross over of these two averages is a bearish signal. If the Trend Seeker does not change to down before a close below the lower trend line, consider waiting for a break through the .9133 (5/21/14) low. A stop loss can be placed above the .9240 high. A downside target is the .9035 (4/23/14) low.
Risk Disclosure
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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