For the Week of November 23, 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 trade in the March 2016 Cotton futures contract. Watching for the contract to break out and close below recent lows in correspondence with a down trending market. There are a series of lows near the 61.60 price level with the lowest being 61.56 (11/13/15) that make up the support level. Additionally, there is an upper trend line the contract continues to fail to break acting as resistance. The Trend Seeker (a U.S. Chart Company tool to help identify a market’s trend) is up at the moment, with a weak ranking. The MACD, a trend indicator, is nearing a cross over to the downside above the baseline. The Stochastic indicator, a momentum indicator, is already bearish. A close below the support level and Trend Seeker changing down, triggers the short entry opportunity. A stop loss will be placed above the recent contract highs and the 20-day Moving Average (62.38). This price is also above halfway of the range from Monday’s large sell-off. A downside target is the twelve-month contract low of 59.94 (9/25/15).
There is a potential Momentum Entry Technique (M.E.T.) trade setup in the January 2016 Orange Juice contract. An M.E.T. trade occurs on a break out of a recent pivot point high or low with the corresponding market trend in that direction. The Trend Seeker (a U.S. Chart Company tool to help identify a market’s trend) is currently up, with a neutral ranking. The MACD, a trend indicator, is bearish above the baseline. The Stochastic indicator, a momentum indicator, is bearish. There is an upper trend line made up of recent highs acting as resistance. A break of the 144.90 (11/18/15) low and change in the Trend Seeker to down, triggers the short entry opportunity. A stop loss will be placed above the recent contract high’s and upper trend line. A first downside target is the 135.00 congestion area and the second, long-term, target is the twelve-month contract low of 105.05 (9/29/15)
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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