For the Week of May 16, 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 Momentum Entry Technique (M.E.T.) trade setup in the June 2016 Canadian Dollar contract. An M.E.T. 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 down with a strong ranking. The MACD, a trend indicator, is bearish above the baseline. The Stochastic indicator, a momentum indicator, is bearish as well. The contract already broke out below a lower trend with points going all the way back to late January 2016 with the close on 5/04/16 at .77740. A further retracement would have setup a 1-2-3 Top Formation, but the 20-day Moving Average acted as resistance. Therefore, waiting for additional downside confirmation by a break of the .76820 (5/09/16) low. A break of that low will also be a break of a 50-day Moving Average (.7725). A downside target is a potential support level near the .75000 price level.
30 Year Treasury Bonds
The June 2016 30 Year Treasury Bonds contract has met resistance near the 167’00 price level three times: in February, April, and now May. Watching for an opportunity to sell the contract on a breakout below recent lows and a lower trend line. Overall the futures price is within a large Channel between 167’00 and 161’00. The Trend Seeker (a U.S. Chart Company tool to help identify a market’s trend) is currently up albeit with a weak ranking. For a short trade confirmation the trend must be down. The MACD, a trend indicator, and the Stochastic indicator, a momentum indicator, both are hooking bearish in the “overbought” level. Additionally, a 20-day and a 50-day Moving Averages are converging. A cross over of these indicators is bearish as well.
U.S. Dollar Index
There is a potential Momentum Entry Technique (M.E.T.) trade setup in the June 2016 U.S. Dollar Index contract. An M.E.T. 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 down though. The MACD, a trend indicator, is bullish below the baseline however. The Stochastic indicator, a momentum indicator, is bullish as well. A break of the 94.845 (5/13/16) high triggers an entry to the upside if the Trend Seeker confirms the uptrend. Additional confirmation would be the cross over the (flat) 20-day Moving Average and (downward) 50-day Moving Average.
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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