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Prop Trading Futures

Chart Patterns and Trading Strategies for the week of April 28, 2014

Based on my game plan, as of Friday’s April 25 close, I have spotted trends in play and developing trading opportunities in: Natural Gas (NGM, UNG, UNL ETFs), AUD-CAD, AUD-CHF, EUR-AUD, CNY-EUR, GBP-AUD, NZD-USD, USD-CAD, USD-MXN, USD- RUB, IShares Barclays 20+Yr Treasuries ETF (TLT), Corn.

At the same time I see congestions (consolidations) that are potentially near to completion in the following markets: GBP-USD, IShares MSCI Canada Index Fund (EWC),  IShares MSCI Canada Index Fund (EWC),  United States Brent Oil National Fund (BNO), Market Vectors Coal ETF (KOL).

TRENDS IN PLAY

E-mini Natural Gas (June QG)

Over the last two years June 2014 Natural Gas Futures Contract has formed a nearly perfect rectangle bottom. This pattern was completed during the end of January with a price thrust above the $4.3-$4.4 resistance area. Since then a complex consolidation has kept prices congested between $4.8 and $4.3.

Try to establish a long position here would be one the most risky things a position/swing trader can do (unless he can afford to risk a move down $4.25). For this reason I would not trade such pattern. I would rather wait February 24 high to be taken out, risking the low of the breakout day or the low of the day prior to the breakout, depending on the developing price action.

June Natural Gas - Rectangle bottom and inverse head and shoulder

For those not able to trade futures contracts – i.e. due to sizing, margin or account issues – there are two Natural Gas ETFs that allow to play the same setup with less leverage. They are the United States Natural Gas Fund, UNG, and the United States 12 Month Natural Gas, UNL, ETFs.

Ideally you should trade futures, not ETFs: futures contract are a way more efficient way to operate speculative maneuvers.

United States Natural Gast Fund

United States 12 Month Natural Gas

Australian Dollar, Canadian Dollar Cross Rate (FOREX)

As pointed out during last week Futures and Forex Trading Strategies report:

“This pair is still on track toward the 1.090 target, as clearly visibile in the daily plot. Our amended stop price has been moved up to 1.0117”.

Going into next week I maintain the same expectation and trading strategy.

AUD-CAD: 9-month double bottom

Australian Dollar, Swiss Franc Cross Rate

Lately this market has formed a small pennant, visible in the weekly plot. In order to do not put in jeopardize the inverse head and shoulder, the flag shall be resolved on the upside early next week. Our SCO order remains at 0.813.

aud-chf> inverse head and shoudler and pennant

Euro, Australian Dollar Rate (EUR-AUD)

The pair has formed a nearly textbook 15-week head and shoulder.

Our trading strategy is unchanged from last week.

Chinese Yuan, Euro (CNY-EUR)

Last week the Yuan weakened on weak economic data. In the process the CNY completed a multi-week bottom formation. If this rate manages to remain above 8.5, then 9.4 would be the measured objective going forward.

(I show this pattern here just as an example. I do no trade this pair.)

CNY-EUR - Bottoming process

British Pound, Australian Dollar (GPB-AUD)

Technically the pattern that we spotted in this market few weeks back – a 15/week head and shoulder – it is still valid. But the strong action of the last 5 trading days was far from expected.

We got stopped out at B/E as per last week strategy.

gbp-aud, 15 week head and shoulder

NZ Dollar, US Dollar rate (NZD-USD)

NZD, USD, WEEKLY PLOT,  SYMMETRICAL TRIANGLE

US Dollar, Canadian Dollar (FOREX)

This spread has formed a rounding bottom. We entered a long position in this market 2 weeks ago risking 40 basis points. Since then the market has moved up. We keep our strategy unchanged – still looking for the long term target at 1.200.

USD-CAD

USD-CAD

US Dollar, Mexican Peso (USD-MXN FX)

I reviewed this pair few minutes before Friday’s US close (check out this post). I’m long.

US Dollar, Russian Ruble (USD-RUB FX)

I’m watching closely this pair and hopefully I can establish a long position during the upcoming week.

US Dollar, Russian Ruble

IShared Barclays 20+Yr Treasuries ETF (TLT)

We are in this market since April 14 risking a close below $107.2. Above the target is at $118.0. This a poor risk/reward setup (1:2) but still worth to be traded. I’m long risking 50 BP.

IShared Barclays 20+Yr Treasuries ETF (TLT)

May E-mini Corn Futures (XC)

I’m long with the same strategy discussed in the previous reports.

Note: on Sunday night I’m going to roll-over to July contract.

May E-mini Corn Futures - rounding bottom

MARKETS IN CONSOLIDATION

Great Britain Pound, US Dollar (GBP-USD)

Nothing has changed in regard to this pair over the past week. Cable may still be in the process of completing a multi-year ascending triangle. The measured price objective of this potential setup would challenge 2008 highs.

image

IShares MSCI Canada Index Fund (EWC)

This ETF is near to complete a multi month ascending triangle – or morph into something else. If during the consolidation the declining volume was not an issue, if the market breaks on the upside we want to see volume confirmation.

A close above $30.5 would have a measured objective at $35.

If I get enter a long position here I would adopt an exit strategy with two OCO stops: a SCO order at the low of the day and an emergency hard stop (EHS) at the low at $29.29.

EWC 136 week ascending triangle (unconfirmed)

United States Brent Oil National Fund (BNO)

This is a nice formation that is developing in the energy complex (see also my previous post here)

image

Market Vectors Coal ETF (KOL)

The weekly chart shows a possible double bottom formation in the making. If we zoom up we spot a low risk-reward pattern to build a small position in this market amid to preposition ourself of an eventual breakout.

KOL

KOL