For the Week of January 23, 2017
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:
Gold
Following the U.S. Elections on November 8th, the April 2017 Gold futures contract sold-off 154.1 points over two months. Since near the end of the 2016 trading year, the futures contract has since rallied 90 points. Seeking additional upside in this market. The target is the 50% Fibonacci Retracement of last fall’s sell-off or 1235.7. There is a current resistance level near today’s session high at 1222.2. There is a lower trend line below recent lows dating back to the start of the year. The trend is up, as MACD is bullish, however it is waning above the baseline. The Trend Seeker (a U.S. Chart Company tool to help identify a market’s trend) is up and with an extreme ranking. The Stochastic indicator, a momentum indicator, is overbought. Watching for a pullback towards the 20-day (1180.1) and 50-day (1186.1) Moving Averages, as well as the 50% Fibonacci Retracement (1177.7) of the last rally. This will provide a better entry opportunity to the upside. The upside target is the 50% Fibonacci Retracement of 1235.7.
Natural Gas
The March 2017 Natural Gas contract is currently resting on a lower trend line with touches at 2.764 (11/09/16), 3.110 (1/09/17), and 3.169 (1/23/16). A close below the trend line triggers an entry to the downside. The Trend Seeker (a U.S. Chart Company tool to help identify a market’s trend) is currently down with an extreme ranking. The MACD, a trend indicator, is bearish below the baseline. The Stochastic indicator, a momentum indicator, is bearish as well. Three Moving Averages (the 20-day, 50-day, and 200-day) are converging. A cross-over with the 20-day Moving Average is a bearish signal. The downside target is the 2.764 (11/09/16) pivot point low. Over the past two trading years this market tends to bottom out in mid-February. Therefore this could be a shorter term trade.
Soybean Oil
There is a Head & Shoulders Formation in the May 2017 Soybean Oil futures market. A break of the neckline triggers an entry to the downside. The neckline looks to be a close below today’s low of 35.35. The first shoulder was made on 36.85 (10/24/16). The head of the formation is the twelve month contract high of 38.11 (12/08/16). The second shoulder was made with the either the 37.20 (1/12/16) or 36.45 (1/13/17) highs. The Trend Seeker (a U.S. Chart Company tool to help identify a market’s trend) is currently down with an extreme ranking. The MACD, a trend indicator, is bearish below the baseline. The Stochastic indicator, a momentum indicator, shows strong movement to the downside. The 20-day Moving Average crossed a 50-day Moving Average confirming the downside trigger. The downside target is the twelve month contract low and first point of the lower trend line at 30.44 (7/28/16).
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