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Prop Trading Futures

Commodities, Financials and FOREX Special Situations – Nov 17, 2014

This week patterns in play are present in the following markets: LEG futures, GCZ and SIZ futures, COW ETF, ZRZ futures, FXI ETF, NK futures, USD/SGD, EUR/JPY, ZW, SGD/JPY, USD/CAD, DX futures, AUD/JPY, ZCH and ZWH futures, GEZ15 futures, CTZ futures.

Potential setups are forming in: EUR/AUD, EUR/GBP, AUD/NZD, EUR/NZD.

Developing Patterns

Live Cattle

The 61-week continuation Inverse Head and Shoulders setup in February Live Cattle provides a great example of H&S setup with a successful retest of the horizontal Neckline while the orthodox Neckline (shown in the picture below) was violated.

With Friday’s close, the target can be considered successfully acquired (that the target was acquired does not mean that $172.575 will not be surpassed).

Live Cattle

iPath Dow Jones USB Livestock

The weekly chart shows a 70+ week possible Double Bottom formation. But here what’s more interesting is the daily chart where a small Head and Shoulder failure pattern was completed on Wednesday. The target of this latest pattern is $34, a level that, if reached, would also confirm the of the Double Bottom interpretation.

iPath Dow Jones USB Livestock

iPath Dow Jones USB Livestock

Eurodollar December 2015

The 47-week Ascending Triangle may be still alive and in play. After the spike higher during the FED day the contract has formed a Flag that could bring to a resumption of the uptrend. Up to today the pullback of the rally from the October low to October highs is coincidentally equal to 61.8% (Fibonacci ratio) the extension of the full move.

Eurodollar CME December 2015

December Cotton

The dominant pattern in Cotton is a 2+ year Ascending Triangle that has been completed on the downside on June 25 and that projects a move to $39.18.

Shorter term, on Friday, another Triangle has been completed (see the second picture below). Its target is $56.

December Cotton

December Cotton

Gold and Silver

The price congestion that occurred in Gold and Silver in the last few days was resolved on Friday and on the upside. This is not the kind of action that one is expected to see once major support levels are broken.

Even if this rally is still far from negate the long term interpretation of a long term bear market in Gold heading toward $1024, it should be considered at least as a warning sign.

I’ve been out of my shorts in Gold since Friday’s RTH open, when I saw that sellers were unable to push prices lower enough to close the opening gap.

I’m not for bottom fishing, but it could be the case that we just had a major bottom in precious metals.

Gold and Silver

Gold and Silver

Gold and Silver

Gold and Silver

Rice

Rice traded close enough to the Failed Head and Shoulder measured target to consider it reached. I had/have no position in this market.

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Corn & Wheat

Corn and Wheat may have just completed 2 Cups and Handle setups and started a move respectively to $442 and $625.

On Monday I will be watching buying interest in Corn to eventually build a long position.

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iShares FTSE China Index Fund

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FXI is working its way out of a multi year congestion. After the successful retest of the upper trendline of a massive Symmetrical Triangle, last week prices closed higher.

Going forward, $42.56 may offer some resistance, but once above that level they should move fairly quickly to 2010 highs and then possibly to the measured move target at $54.

Nikkei 225 CME

I did not trust this movement so currently I have no positions in Japanese equities. But next week I’ll be monitoring for possible breakouts in NKY and EWJ ETFs (now shown here) to get into the bull party.

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AUD/JPY

Here we have a beautiful Channel breakout in play.

While novice traders get killed trying to buy bottoms and sell tops, momentum bust setups with prices breaking to 252-days high are very counter-intuitive yet profitable setups.

I’m long.

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USD/SGD

Friday close on 2 year high’s is very encouraging for the bulls. Any sideways pullback may present a good opportunity to scale in on existing long positions.

I’m long.

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Dollar Index (DXZ)

Flirting with 88.310 (2010 high). It will be interesting to see if next week we can close above this level.

As of today my long exposure in the buck is limited to my (un-hedged) portfolio exposure to the USD.

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EUR/JPY

While Descending Triangles should resolve to the downside and Ascending Triangle to the upside more and more often we see  opposite cases. EUR/JPY is an example.

I’m long.

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SGD/JPY

Do not have/had  positions in this market, but I wish I had.

I am posting it here just for recording purposes.

Singapore dollar

USD/CAD

It may be headed to 1.16, but I do not like the daily price action.

Last week I closed my long positions.

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Patterns in formation 

EUR/AUD

The weekly chart tells a story of a market that has a long way to go… Down!

The Head and Shoulder multi-month top needs a decisive below 1.38 to to be confirmed. Shorter term, the daily chart may offer good risk-reward setup to anticipate the breakdown.

I’ll be short below 1.4232.

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EUR/GBP

The pair has been trading just above an important support level – clearly visible in the weekly chart.

The daily plot is showing a possible “bastardized” Inverse Head and Shoulder formation that may provide a good setup for a swing.

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USD/MXN

A very intriguing monthly chart (not shown here, but you may find it in the previous report) and potentially a nice weekly setup, but a boring daily chart. This what MXN has to offer.

Next week I will be watching for 13.644 resistance and 13.434 support.

I’m long and ready to bail at or below 13.434.

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