For the Week of September 14, 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:
There is a Bear Flag Formation in place in the December 2015 Crude Oil contract. A rally from the twelve-month contract low of 39.22 (8/24/15) to the high of 50.89 (8/31/15), and then sell off sets up the formation. There are touches on a downward sloping trend line at 50.89 (8/31/15), 50.22 (9/01/15), 49.53 (9/03/15, and 47.01 (9/11/15). There is a support level that can be drawn off the 44.63 (9/02/15) low. A 50% retracement of the rally places the 50% level at 45.26. A break below the 50% level and support line triggers an entry to the downside. The Trend Seeker (a U.S. Chart Company tool to help identify market trend) is currently up, but with a weak ranking. The MACD, a trend indicator, shows the same. The Stochastic indicator, a Momentum indicator, hooked to the downside already. A 20-day and 50-day Moving Average are converging as well. For confirmation of a trade, the trend should be down. A potential stop loss could go above the downward sloping trend line. A downside target is the 40 price level, just above the twelve-month contract low of 39.65 (8/24/15).
There is a 1-2-3 Bottom Formation in place in the December 2015 Soybean Oil contract. This formation is a bullish pattern. A break of the number two point triggers a long entry. The number one point is the twelve-month contract low of 25.70 (8/24/15). The market rallied through the top of a Channel Formation to make a new short-term contract high at 28.30 (8/31/15), before pulling back. That rally setup the number two point. A number three point formed at 26.40 (9/11/15) as the pullback did not surpass the twelve-month contract low and has since been trading higher. The MACD, a trend indicator, and Stochastics, a Momentum indicator, are both bullish, but currently flat. A 20-day Exponential Moving Average and a 50-day Moving Average are moving downward. The Trend Seeker (a U.S. Chart Company tool to help identify market trend) is down, with a weak ranking. For trade confirmation, the trend should be up. There is downward sloping trend line as that can be used as a long entry if the market closes above it. A potential stop loss would go below the Chanel Formation low of 26.35 (8/25/15). An upside target is the 30.00 price level.
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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