For the Week of May 18, 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.
Let’s focus on three contracts that have defined Trend Lines Formations.
Highlighting This Week’s Potential Breakouts:
The June 2015 Australian Dollar contract formed a lower trend line with touches at .7528 (4/14/15), .7546 (4/15/15), .7765 (5/05/15), and .7872 (5/12/15). While in a brief uptrend, the contract made higher lows establishing the lower trend line. The Trend Seeker (a U.S. Charts Company tool to help identify market trend) is currently up, though with a weak ranking. The MACD, a trend indicator, currently above the baseline shifted bearish. Coupled with the Stochastics indicator showing a contract with downward momentum, this appears to be an overbought market. A close below the lower trend line and Trend Seeker changing to down triggers a short entry opportunity. The target is the twelve month contract low of .7504 (4/02/15). A potential stop loss will be place above the trend line, which may now act as a resistance level.
The June 2015 Crude Oil contract formed a lower trend line as well with touches at 45.93 (3/18/15), 48.79 (4/01/15) and 58.42 (5/15/15). The Trend Seeker (a U.S. Charts Company tool to help identify market trend) is currently up, again, with a weak ranking. The MACD, a trend indicator, and Stochastics, a momentum indicator, are both relatively flat but turning bearish. A close below the lower trend line and Trend Seeker changing to down would trigger a short entry opportunity. Another short entry trade conformation is a cross over of the 20-day and the 50-day Moving Averages. An ideal stop loss is above the pivot high at 62.58 (5/06/15), though this may be more risk than comfortable in a volatile market. A potential downside target is the contract twelve month low of 45.93 (3/18/15).
The July 2015 Coffee contract formed an upper trend line with touches at 157.45 (2/20/15), 156.50 (2/23/15), 149.85 (4/06/15), 147.25 (4/22/15) and 143.40 (5/18/15). The Trend Seeker (a U.S. Charts Company tool to help identify market trend) switched to neutral Friday. The MACD, a trend indicator, is below the baseline and bullish. The Stochastics indicator, a momentum indicator is strongly bullish. A long entry confirmation is the close above the trend line and Trend Seeker changing to up. Another long entry trade conformation is a cross over of the 20-day and the 50-day Moving Averages. A stop loss will be placed below recent contract lows. A potential upside target is the 165.00 price level where their appears to be plenty of potential resistance.
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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