For the Week of May 02, 2016
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 breakout trade in the July 2016 Copper futures contract. A trade sets up if the contract price closes below a lower trend line with touches at 2.0815 (4/12/16), 2.2010 (4/27/16), 2.2080 (4/28/16), and 2.22550 (4/29/16). The Trend Seeker (a U.S. Chart Company tool to help identify a market’s trend) is currently up, with a strong ranking. In order for confirmation of a short entry, the Trend Seeker should be down. The MACD, a trend indicator, is bullish above the baseline. The Stochastic indicator, a momentum indicator, is flat just above the 80 level. These indicators may be displaying a potentially overbought contract. For confirmation, these indicators must first hook over bearish. Additionally, 20-day, 50-day, and 200-day Moving Averages are converging, a cross over is trade confirmation as well. The contract price appears to have found resistance near the 2.3000 price level. There are trading session highs at 2.3045 (3/04/16), 2.3025 (3/17/16), 2.3290 (3/18/16), 2.3075 (3/21/16), 2.3010 (3/22/16), 2.3025 (3/23/16), 2.3055 (4/22/16), and 2.2985 (4/29/16). Stop losses will initially be placed over the 2.3000 price level. A downside target is the first point on the trend line at 2.0815 (4/12/16).
There is a potential M.E.T. breakout trade in the July 2016 Rough Rice futures contract. An M.E.T., or Momentum Entry Technique, trade occurs on a break out of a recent pivot point high or low with the corresponding trend in the same direction. The Trend Seeker (a U.S. Chart Company tool to help identify a market’s trend) is currently up, with a strong ranking. The MACD, a trend indicator, is bullish. The Stochastic indicator, a momentum indicator, is bullish as well, which is important for this trading technique. The 20-day and 50-day Moving Averages are converging, a bullish signal. The contract has found support with higher lows at 10.030 (4/13/16), 10.135 (4/14/16), 10.315 (4/18/16), and 10.925 (4/29/16) making up a lower trend line. A break of the 11.390 (4/26/16) high triggers an entry to the upside. A stop loss would initially be placed below the lower trend line. An upside target is a potential resistance level near the 13.000 price level.
There is a potential breakout trade in the August 2016 Feeder Cattle futures contract. The trade sets up if the contract price closes above an upper trend line with touches at 164.100 (3/17/16), 154.775 (4/11/16), and 152.475 (4/15/16). The Trend Seeker (a U.S. Chart Company tool to help identify a market’s trend) is currently down, with a strong ranking. For trade confirmation of a long entry, the Trend Seeker should be up. The MACD, a trend indicator, is bearish below the baseline. This indicator should also be bullish before taking a long entry. The Stochastic indicator, a momentum indicator, appears to have hooked over already. Stop losses will initially be placed below the twelve-month contract low of 138.100 (4/29/16). An upside target is a potential resistance level near the 164.1000 (3/17/16) high.
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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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