For the Week of October 26, 2015
This weekly feature examines chart formations, along with technical indicators, of two to three commodity markets. Breakouts of these formations may lead to trading recommendations published by the Trade Spotlight advisory service.
Highlighting This Week’s Potential Breakouts:
There is a potential support level breakout in the December 2015 Crude Oil contract. There are touches between the 45.00 and 44.00 price level at 44.63 (9/02/15), 44.67 (9/10/15), 44.67 (9/14/15), 44.31 (9/24/15), 44.45 (10/02/15), and 44.20 (10/23/15). A close below the support level will trigger a trade to the downside. The Trend Seeker (a U.S. Chart Company tool to help identify a market’s trend) is neutral. The Trend Seeker should read down for trade confirmation to short the contract. The MACD, a trend indicator, is slightly bearish above the baseline. The Stochastic indicator, a momentum indicator, is bearish. A 20-day Exponential Moving Average and a 50-day Moving Average are converging. A cross over is a bearish signal as well. The downside target is the twelve month contract low of 39.22 (8/24/15). A stop loss could be placed above any of the recent trading highs based on your risk appetite.
The December 2015 Chicago Wheat contract formed a 1-2-3 Bottom Formation. 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 463’0 (9/04/15). The market rallied to make a new short-term contract high at 531’4 (10/07/15), before pulling back. That rally setup the number two point. A number three point formed at 483’2 (10/20/15) as the pullback did not surpass the twelve-month contract low and has since been trading higher. The MACD, a trend indicator, is bullish below the baseline. Stochastics, a Momentum indicator, is bullish as well. A 20-day Exponential Moving Average and a 50-day Moving Average have crossed over and expanding. The Trend Seeker (a U.S. Chart Company tool to help identify market trend) is neutral. For trade confirmation, the contract price should break through the number two point and Trend Seeker should change to up. Though this is a trend reversal pattern, the Trend Seeker may not change before the breakout. An upside target is the 600’0 price level below the twelve-month contract high of 623’6 (6/30/15).
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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