Copper Futures—Copper futures in the July contract is sharply lower this Wednesday afternoon in New York down 800 points currently trading at 2.8240 a pound as prices have now hit a 10 week low. I have talked about copper on multiple occasions and if prices close below 2.84 I will be recommending a short position while placing the stop loss above the 10 day high which now stands at 2.97 as the risk is around $3,800 for a large contract plus slippage & commission or $1,900 per mini contract plus slippage & commission.
The chart structure will start to improve in Friday’s trading session as the stop loss will be lowered to 2.9385 as it looks to me that prices topped out on April 14th around the 3.00 level so play this to the downside.
Copper prices are now trading below their 20 and 100 day moving average telling you that the trend has turned to the downside coupled with the fact that we have now broken out of an 8 week tight consolidation pattern as the longer the consolidation the stronger the breakout in my opinion.
The commodity markets across the board remain bearish as there is a lot of red on my screen as I write this article as all the money flows continue to go into the U.S equity market which hit another all-time high.
CHART STRUCTURE: IMPROVING
Cotton Futures—Cotton futures are trading lower for the 4th consecutive session down another 100 points at 75.78 as I am now recommending a bearish position while placing the stop loss above the high that was created on April 9th at 79.57 as the risk is around $1,900 per contract plus slippage and commission.
Cotton prices are now trading under their 20 and 100 day moving average as the trend has turned to the downside as prices topped out over the last several weeks as the agricultural market across the board remain weak especially the grain market.
Planting is in full swing in the southern part of the United States as ideal weather conditions persist as that is also putting pressure on prices coupled with the fact of weakening demand as we still do not have an agreement with China as they are the largest importer of U.S cotton in the world.
The chart structure will improve in next week’s trade therefor the monetary risk will be lowered as I still believe the risk/reward are in your favor so play this to the downside while making sure that your risk 2% of your account balance on any given trade.
CHART STRUCTURE: IMPROVING
TRADING THEORY—How long does a meaningful consolidation has to last before you enter a trade? In my opinion I always want to see a consolidation that lasts at least 8 or more weeks before I would consider entering.
The reason that I want a longer consolidation is to try and avoid a bunch of false breakouts such as a 10 or 15 day consolidations which happen all the time, so I am trying to put the odds in my favor by trading the breakout of at least 8 weeks or more and the longer such as a 10 or 13 week consolidation the better.
Soybean Futures—Soybean futures in the July contract is trading lower for the 4th consecutive trading session down another $0.05 at 8.49 a bushel as traders are selling soybeans and buying corn due to the excessive wet weather that we are receiving in the midwestern part of the United States.
If the rain continues for several more weeks you would certainly think that more acres will be planted for soybeans and that is why you’re seeing tremendous weakness, however like I have talked about many previous and I do think we will touch the 11 year low of 8.10 in the next couple of weeks as I see no reason to be a buyer of soybeans.
If the 8.10 level is broken you can expect to see prices test the 7.75 level as the hot and dry season does not come about until the month of June as there are several more weeks of weakness as the agricultural markets continue to bleed.
Soybean prices are trading far below their 20 and 100 day moving average as the trend is to the downside as we have about 3% of the crop planted, but the majority of soybeans are planted in late May as the concern right now is with corn which is trading higher once again.
CHART STRUCTURE: POOR
What Is A Rounding Top Chart Pattern ? A chart pattern used in technical analysis which is identified by price movements that, when graphed, form the shape of an upside down “U”. A rounding top may form at the end of an extended upward trend and indicates a reversal in the long-term price movement. The pattern can develop over several weeks, months or even years, and is considered a rare occurrence by many traders.
This pattern is also described as an inverse saucer. A rounding top represents a sell signal to technical analysts. The initial upwards trend becomes exhausted as the demand for the stock dries up.
The reversal to the downward slope of the rounding top indicates that demand has tapered off and a surplus supply is present, basically there are more sellers than buyers.
Sugar Futures–-Sugar futures in the July contract is currently trading at 12.25 as I’m now recommending a bearish position while placing the stop loss above the April 22nd high of 13.05 as the risk is 80 points or $900 per contract plus slippage and commission as the soft commodity sector remains bearish.
At the present time I’m also recommending a short position in cotton and also have a bearish bias in orange juice as the trend is your friend. Sugar futures have now hit a 4 month low and I as I have talked about in previous blogs I think prices will break the January 3rd contract low of 11.99 as the E.U increased their sugar production by 7% as that fundamental news has put pressure on prices in the short-term.
The chart structure will start to improve in next week’s trade therefor the monetary risk will be lowered as the volatility has increased tremendously over the last several days.
Sugar prices are trading below their 20 and 100 day moving average as we have broken out of a 50-point trading range over the last 6 weeks and if 11.99 is broken I think there’s a possibility prices could trade substantially lower.
CHART STRUCTURE: SOLID—IMPROVING
Silver Futures—Silver futures in the July contract finished sharply lower off of comments by Federal Reserve chairman that inflation remains very low sending prices down $0.30 to close around 14.69 hitting a 5 month low as the whole precious metals sector looks weak.
At the present time I have a short copper recommendation and I do think silver prices are going lower as well, but I don’t want to overload in one sector, however if you’re not involved in copper I would sell at today’s price level while placing stop loss above the 10 day high which stands at 15.13 as the risk is about $0.45 or $2,250 per contract plus slippage and commission.
The U.S dollar continues its bullish momentum reversing earlier losses while then rallying towards the closing down as I’ve written about that currency on many occasions as I still believe the U.S dollar will crack the 100 level as the U.S economy clearly is the strongest economy in the world and looks to even get stronger.
The next major level of support is around the 14.25 / 14.50 level as there’s a possibility we could trade into the $13 level, but historically speaking prices look cheap, however the commodity markets at the current time clearly are bearish so play this to the downside as the risk/reward are in your favor.
CHART STRUCTURE: SOLID
U.S Dollar Index Futures—The U.S dollar in the June contract rallied sharply off of session lows due to the Federal Reserve comments sending the dollar up 20 points at 97.41 as I am now recommending a bullish position while placing the stop loss under the April 12th low of 96.36 as the risk is around $1,100 per contract plus slippage & commission.
For the bullish momentum to continue prices have to break the April 26th high of 98.08 in my opinion as the chart structure is excellent as I see no reason to own the foreign currencies at this time.
The dollar is trading above 20 and 100 day moving average as the trend is higher as this generally is a non-volatile currency unless some type of unusual circumstances arrive.
As I have talked about in many previous blogs I still believe that the U.S dollar will trade above 100 eventually as the United States economy is way too strong to have a weak dollar especially when Europe experiences no growth or ingenuity due to the socialistic based economies.
CHART STRUCTURE: EXCELLENT
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