For the Week of February 17, 2015
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 contracts with potential trend line breakouts. Trend lines act as potential support or resistance levels in the markets. A close above an upper trend line or close below a lower trend line triggers a potential trade setup if technical indicators confirm the chart formation.
British Pound
The March 2015 British Pound contract has formed a downward sloping trend line with touches at 1.6494 (9/19/14), 1.6160 (10/28/14), 1.5776 (12/16/14), and 1.5349 (2/06/15). The contract closed above the upper trend line on 2/12, however, the Trend Seeker (a U.S. Chart Company tool to help identify market trend) is neutral. For trade confirmation, the trend must be up. The MACD, a trend indicator, is already bullish below the baseline. The Stochastic indicator exhibits a contract with strong momentum, though it’s in the overbought level currently. A 20-day Moving Average is sloping upward, while a 50-day Moving Average is sloping downward. A crossover of these averages is a bullish signal. A long entry on a pull back to the trend line is an aggressive entry if the Trend Seeker has not yet changed. A potential stop loss is below the recent contract lows near 1.5163 (2/05/15). An upside target is a potential resistance level at 1.5813 (11/28/14).
U.S. Dollar
The March 2015 U.S. Dollar contract has formed an upward sloping trend line with touches at 87.830 (12/16/14), 93.680 (2/06/15), and 94.075 (2/12/15). The contract closed below the lower trend line on 2/13, but once again, the Trend Seeker has not confirmed the trade. The Trend Seeker (a U.S. Chart Company tool to help identify market trend) is up. For trade confirmation, the trend must be down. The MACD, a trend indicator, is already bearish above the baseline. The Stochastic indicator exhibits a contract with momentum to the downside. A 20-day Moving Average and a 50-day Moving Average are sloping upward. Perhaps a breakout using the Momentum Entry Technique of the 93.385 (2/03/15) low will allow for a shift in the trend. A potential stop loss is above the pivot point high of 95.230 (2/11/15). One downside target is the 50% retracement of the last rally at 91.865. A second target is the 87.830 (12/16/14) low which may be a potential support level.
Silver
The May 2015 Silver contract has formed an upward sloping trend line with touches at 14.705 (12/01/14), 15.570 (1/02/15), 16.600 (2/06/15), and 16.650 (2/12/15). The Trend Seeker (a U.S. Chart Company tool to help identify market trend) is neutral, with a bearish ranking. For trade confirmation, the trend must be down. The MACD, a trend indicator, is already bearish above the baseline. The Stochastic indicator exhibits a contract with momentum to the downside. A 20-day Moving Average is sloping downward, while a 50-day Moving Average is flat. A crossover of these averages is a bearish signal. A potential stop loss is above Friday’s high (17.475) and the 50-day Moving Average. The downside target is the twelve-month contract low of 14.705 (12/01/14).
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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