For the Week of September 15, 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:
After the USDA Supply/Demand and Crop Production reports on Thursday, September 11 and as Soybeans approach harvest here in the U.S., let’s review the bean complex:
The November 2014 Soybean contract has been in a downtrend according to Trend Seeker (a U.S. Chart Company tool to help identify market trend) for the past 52 days. The contract price is down over $2.00 in that time. An upper trend line has formed with touches at 1116’4 (7/29/14), 1089’2 (8/11/14), and 1028’0 (9/08/14). MACD, a trend indicator, agrees with Trend Seeker. It’s flat but slightly bearish. Stochastics, a Momentum indicator, is above the “over sold” level though. Both the 20-day Exponential and 50-day Simple Moving Averages are angled down. If the contract closes above the upper trend line and the indicators hook upward, a long entry could be considered. A potential stop loss would be placed below the twelve-month contract low of 969’4.
The December 2014 Soybean Meal contract broke out of a Channel Formation to the downside. The top of the Channel was 366.6 (7/17/14). The bottom of the Channel was 337.8 (8/12/14). The 20-day Exponential and 50-day Simple Moving Averages are expanding. MACD, a trend indicator, is slightly bearish, but below the baseline. Stochatics, a Momentum indicator, is “over sold”. The Trend Seeker (a U.S. Chart Company tool to help identify market trend) is Down. Though there was a breakout to the downside, the indicators were not in favor of a strong move as Momentum was weak. Waiting for a trade setup.
The December 2014 Soybean Oil contract is setting for a trade to the upside. An upper trend line, with numerous touches at 41.31 (6/25/14), 41.13 (6/26/14), 40.99 (6/27/14), 37.36 (7/29/14), 36.36 (8/06/14), 36.26 (8/07/14), 36.06 (8/08/14), 35.95 (8/11/14), and 32.80 (9/08/14), was broken on Friday with a close at 32.77 (9/12/14). MACD, a trend indicator, is Bullish below the baseline. Stochastics, a Momentum indicator, is strong to the upside. A 20-day Exponential Moving Average is hooking up towards a 50-day Simple Moving Averages. However, the Trend Seeker (a U.S. Chart Company tool to help identify market trend) is still Down. If the Moving Averages cross over and Trend Seeker reads Up, a long entry could be considered. A potential stop loss can be placed below the twelve-month contract low of 31.52 (9/10/14). A potential upside target is the resistance level at 41.31 (6/25/14).
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