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:
Australian Dollar
There is a breakout based on the Momentum Entry Technique in the Australian Dollar market. The March 2017 futures contract traded through a resistance level taking out the high of .7508 (1/12/17). The previous pivot point high of .7509 was broken as well. There is a much larger Cup & Handle Formation potentially forming. However, the Cup may be more “V” shape than the typical “U” shape. Anticipating a pullback to form the Handle of the formation. Then a breakout above trend line forming the Handle will trigger an entry to the upside. The Trend Seeker (a U.S. Chart Company tool to help identify a market’s trend) is already Up, though with a Neutral ranking. The MACD, a trend indicator, is bullish below the baseline. The Stochastic indicator, a momentum indicator, is bullish as well. This is also in line with seasonally tendencies.
Cocoa
There is a long upper trend line formed in the Cocoa market. There are several touches dating back to mid-August in the May 2017 futures contract. The contract has traded above the trend line, only to close below and continue the sell-off. For trade confirmation, looking for a close above the trend line. The Trend Seeker (a U.S. Chart Company tool to help identify a market’s trend) is currently Down, but with a Neutral ranking. The MACD indicator, a trend indicator and the Stochastic indicator, a momentum indicator, are bullish. A 20-day Moving Average is approaching a 50-day Moving Average, a cross over of these Moving Averages confirms a buy signal. An upside target is the 2,600 price level which is the 50% Fibonacci Retracement of the six month sell-off.
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