Quantcast

Prop Trading Futures

Commodities, Financials and FOREX Special Situations – Oct 13, 2014

We start this edition of our weekly market update by presenting price and charts developments in United States Dollar, Gold, Silver, Palladium, US Stock Indexes, NZD-JPY, USD-BRL, Live Cattle, Eurodollar and Cotton markets. All these markets present special situations where trends -originated from breakouts out of classical chart patterns- are already in play.

In the second part of this report we will instead cover special situations of markets where breakouts did not occur yet, but could be near to happen. These markets are: Australian Dollar, Euro, Pound, Canadian Dollar, Mexican Peso, USD-SGD, EUR-AUD, EUR-JPY, Natural Gas, Coffee.

Chart Patterns in Play

United States Dollar (DX futures, UUP ETF)

Monthly and weekly charts – shown below – suggest that a new bull trend in the Dollar Index is underway. The launching pattern, a 9-month Symmetrical Triangle, makes the case for a move above to and above the 105 mark.

Support is at 84.965. Resistance is at 88.410 and 89.47.

United States Dollar -Commodities, Financials and FOREX Special Situations

United States Dollar - Commodities, Financials and FOREX Special Situations

Gold (GCZ futures, GLD ETD)

In the picture below I present the weekly chart of Gold where a well formed continuation Symmetrical Triangle projects a minimum move to $1010. Should Gold trade above $1270, this interpretation would be wrong.

Weekly Support is at $1176.4. Weekly Resistance is at $ 1239.4

Gold

Silver (SIZ futures, SLV ETF)

There are two setups that are still in Play in the Silver market: a multi year Descending Triangle, started in 2011; and a smaller, similar pattern, formed since last year.

Weekly resistance is at $1845. Weekly support is at $1670, $1391 and $1019. Measured move targets are at $1391, $1019.

Silver

Palladium

Over the last year Palladium has been the stronger commodity in the precious metal complex, but in the last few weeks it has been one that got hit harder.

Longer term, Palladium has a Symmetrical Triangle target at around $1049, but current weakness is seriously jeopardizing this interpretation. In my view, any close below this last week’s low would mean lower prices head, both medium and short term.

Weekly support is at $736. Weekly resistance is at $805.

Palladium

Palladium

US Stock Indexes (ES, TF, NQ, futures; SPY, IWM, QQQQ ETFs)

The US stock market had a dramatic change of behavior in the last 2 weeks. This is something that can be hardly appreciated looking at a daily and weekly chart alone. But a closer analysis of Intraday price action and overall stock market breath leaves no doubts: this small correction could become something bigger (unless next week’s the FED say something to change the course of the current trend).

Right NQ, TF and ES (the last is now shown here) are at levels where at least a few day bounce – under normal conditions – could be expected: NQ futures (shown below) are sitting on an important support level, while the Standard and Poor’s just tested the 200-day moving average. But we warned, if prices cannot sustain current levels a sharp selloff could be behind the corner.

The Russell 2000 futures show a beautiful channel setup. Its minimum target is at $1000.

US Stock Indexes

US Stock Indexes

NZD-JPY

This market had a nice Head and Shoulder setup that developed over the last 2 weeks. Its target is at 82.232.

Weekly resistance is at 85.600.

$NZD-JPY

USD-BRL

On Friday the USD-BRL pair closed just below a key resistance level. If it breaks above again, it means and it’s ready to move higher. The target of this pattern is at 2.741. Support is at 2.3771.

$USD-BRL

Live Cattle

I arguably labeled the price action in Live Cattle as a continuation Inverse Head and Shoulder.  Now the market is now moving toward its target at $172.575.

Support can be found at 165.425.

Live Cattle

March 2018/December 2015 Eurodollar

Depending on which contract month we are looking at, here we have one Pattern in Play (in the March 2018 contract) and one Pattern in Formation (December 2015 contract).

In  December 2015 Eurodollar, weekly support can be found at $99.095. Weekly resistance -and breakout level- is at $99.15.

Eurodollar

Eurodollar

Cotton (CT futures, BAL ETF)

Since the Cotton continuation contract had a breakdown from a multi-year Ascending Triangle, the trend is down and the price is moving toward it’s measured target at $51.80.

Cotton

Support is at $62.74 and $60.83. Resistance is at $65.60 and $67.91.

clip_image064

Chart Patterns in Formation

Australian Dollar (AUD-USD Spot; 6A, M6A futures; FXA ETF)

Below are shown the monthly and daily charts. Arguably AUD-USD is forming a massive reversal Head and Shoulder.

A decisive close below 0.862 completes the 5-year topping formation and suggest a retest of 2008 in the next years/months. A close above 2014 highs would negate this interpretation.

Weekly Support is at 0.8679 and 0.8000. Weekly Resistance is at 0.8898

clip_image038

clip_image040

Euro (EUR-USD spot; 6E, M6E futures; FXE ETF)

Below are shown the monthly and daily charts. A decisive close below 1.2154 completes the 7-year Symmetrical Triangle and indicates that a move to 0.8582 may be in its first stages.

Weekly Support is at 1.21540. Weekly resistance is at 1.2890 and 1.29950.

clip_image042clip_image044

British Pound (GBP-USD, 6B, FXB ETF)

The sharp drop from 1.7191 to current levels was sharp enough to put in jeopardy any long term bullish resolution of the Cable. Nevertheless, as of today, this move represents only a 50% correction of the leg up from July’s 2013 lows to July’s 2014 highs. Technically, this can still be seen as a correction of the dominating bull move.

Weekly Support at 1.5953. Weekly Resistance at 1.6443.

clip_image046clip_image048

Canadian Dollar (USD-CAD spot; 6C futures; FXC ETF)

Below are shown monthly and daily charts. There we currently we have two Patterns in Play, both suggest a weaker CAD (strong USD-MXN). The big pattern is a multi-year Rounding Bottom. The smaller one is a 4-month Inverse Head and Shoulder. Their measured move targets are respectively at 1.1594 and 1.1319.

Support can be found at 1.1087 and 1.0984. Resistance is at 1.1251.

Commodities, Financials and FOREX Special Situations  Commodities, Financials and FOREX Special Situations

Mexican Peso (USD-MXN spot, 6M futures)

Longer term the Peso is in a consolidation that may resolve either to the upside or to the downside. Given the muti-year bearish market in the Peso (bull market in the USD-MXN pair) I favor the idea that the resolution will be on the upside.

Medium and short term, the USD-MXD has formed two Cup and Handle patterns (with targets respectively at 15.003 and 13.807). They both provide traders decent setups to build a long position and speculate on the higher prices head.

Mexican Peso - Commodities, Financials and FOREX Special Situations

Mexican Peso - Commodities, Financials and FOREX Special Situations

US Dollar-Singapore Dollar (USD-SGD)

Another Symmetrical Triangle, in this case at the end of a multi-year down trend. Did the USD-SGD bottomed and now reversing the trend up? I do not know, but currently the market is offering a low risk-reward setup to test this idea.

Above, the first resistance level to be broken is at 1.2821. Below, 1.2700 and 1.2595 should offer support if prices roll down from current levels.

Technically, the Symmetrical Triangle is completed, but an immediate break of 1.2821 would offer ad double confirmation of the setup. Otherwise the pair may just have formed a bullish trap.

Commodities, Financials and FOREX Special Situations

Commodities, Financials and FOREX Special Situations

Euro-Australian Dollar (EUR-AUD spot)

Below I present the case of a trend reversal in the EUR-AUD pair.  Currently in this pair we have an already completed Descending Wedge (with a target at 1.5802) and a potential small Inverse Head and Shoulder.

Resistance is at 1.4568. Support is at 1.4314.

EUR-AUD Commodities, Financials and FOREX Special Situations

Euro-Japanese Yen (EUR-JPY spot)

I have a strong conviction that this pair is ready to move lower and the market is setting up a nice setup (a Descending Triangle) to test this idea.

Support (and breakout level) is at 135.939. The measured move target is at 127.065.

$EUR-JPY

Natural gas (NG futures, UNG ETF)

Below I present the weekly chart of Natural gas continuation contract.

The main hypothesis here is that the $3.817 support will not hold. A decisive breakdown from current levels should lead to a retest of $3.437.

Natural Gas - NG - UNG

Coffee (KC futures, JO ETF)

Coffee is forming what could arguably be a Cup and Handle setup (Cup and Handle formations are not a classical pattern, but still something that is working very well and I regularly use in all the market that I follow).

Resistance and breakout level is at $225.70. Support is at $210.50. Above the target is at $338.40.

coffee

clip_image014.gif