For the Week of October 9, 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:
There is a 1-2-3 Top Formation setting up for the December 2017 British Pound futures contract. The number one point is the twelve month contract high of 1.3622 (9/21/17). The number two point is the recent contract low of 1.3048 (10/06/17). Watching for a retracement to setup the three point. This formation is a trend reversal pattern. The Trend Seeker (a U.S. Chart Company tool to help identify a market’s trend) is down, though with a weak ranking. The Stochastic indicator has hooked up implying that short-term retracement. Short the contract only on a reversal of momentum and break of the number two point. A 20-day Moving Average has hooked down. There is a wide gap between that and the 50-day Moving Average, but a cross over of the two confirms the bearish position. A stop loss will likely be placed initially above the 50-day Moving Average. The downside target is near the 1.2663 (6/21/17) session low, the first point on a lower trend line. That trend line or the 200-day Moving Average below may act as a stringent support level. The stop loss will be trailed in that case.
The December 2017 Gold futures contract found support near the 200-day Moving Average (1259.5) last Friday. Using the Momentum Entry Technique (M.E.T.), buying the contract on a break of today’s session high (1288.0). The upside move today also break through a trend line going back to the twelve month contract high of 1362.4. The upside target is the 50% Fibonacci Retracement of the last sell-off (1313.3). The initial stop loss will be placed below the pivot point low of 1262.8 (10/06/17). The Trend Seeker (a U.S. Chart Company tool to help identify a market’s trend) is currently down, though with a weak ranking. The MACD and Stochastic indictors are shifting up, though it may be a short term retracement. The 20-day Moving Average crossed the 50-day Moving Average. On a retracement the contract would be setting up 1-2-3 Top Formation.
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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