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Prop Trading Futures

FOREX, Futures and Equities – Classical Chart Patterns Report – Aug 31

Due to technical issues, this week’s report is coming in a reduced version.

PATTERNS IN PLAY

US Dollar/Canadian Dollar

The dominant theme in this market is a a Major Bottom formation completed in December 2013. The measured target of this pattern is 1.1578.

US Dollar/Canadian Dollar

Shorter term the market is showing a possible 4-Month Head and Shoulder Failure pattern that is nearly confirmed. A close below Friday’s low would indicate that a retest of July 2014 low is very possible.

On the other hand, a sustained move above 1.1000 would increase the probabilities that the target at 1.1595 will be visited before any move down to the 1.0600 area.

US Dollar/Canadian Dollar

US Dollar/Swiss Franc

The Cup and Handle setup completed in July is playing out. The minimum measured objective of the resulting trend is 0.9300.

US Dollar/Swiss Franc

US Dollar/Japanese Yen

This cross rate recently completed on the upside a Descending Triangle.  This is a less than ideal setup for two reason. Firstly, the Descending Triangle usually is resolved one the downside. Secondly, the short-Yen trade (long USD/JPY) is a crowded one. Nevertheless the setup was triggered and the market so far is acting well. If interest to get into this trade, I recommend to buy weakness and not strength. Above the target is in the highs 160.

Note: for chart analysis I prefer to use sport rates, but for trading, where possible, I prefer to trade futures. The Yen is not an exception.

US Dollar/Japanese Yen

Australian Dollar/Japanese Yen

Another short-Yen setup that is playing out decently (but “less decently” than the USD/JPY one).

In this case we have a completed Inverse Head and Shoulder that projects a move to around 99.580.

Australian Dollar/Japanese Yen

Australian Dollar/NZ Dollar

Seems that everybody is into this trade and that makes me less than confident about it’s upside potential. Anyhow the setup is in and currently the market offers a good spot for a long with a stop at 8/25 low.

I would bet a small portion of my capital (1/4 than normal size) on this long for the reasons mentioned above.

Australian Dollar/NZ Dollar

British Pound/Canadian Dollar

Here we have a complex Top formation. A close below Friday’s low would create a decent risk-reward setup.

8/27 high is a good risk point to place a buy SOC (stop on close only). Below the target is near 1.7600

British Pound/Canadian Dollar

Natural Gas

The last time I analyzed here this market was when the target of the Rectangle top from January 2014 was completed. Since then the market has consolidated and formed a small Double Bottom formation.

In this bottom do not see a good risk-reward situation to trade just this pattern, but since this setup may launch a long waited bull market in NG I (just) like to mention it. I have no position in this market.

Natural Gas New York

DEVELOPING PATTERN

December 2016 Eurodollar

I’m looking forward to have an established trend in the Eurodollar.

Unfortunately we are not quite there yet. But the longer the consolidation, the longer the trend that follows. I’m expecting fireworks for the GEZ16, especially if it breaks to the downside.

A close above this year’s highs or this year’s lows will get me respectively long and short. I wish I could anticipate the breakout before it happens, but right now I see no launching patterns

This market is on the top of my watchlist.

December 2016 Eurodollar

T-Notes 5-Year

Of course T-Notes and Eurodollar are two strictly correlated markets that are worth to be watched together, especially when looking for confirmations of new trends.

Right now ZF is also showing a much more bearish behavior than GE in the sense that is chopping higher while forming a possible Rising Wedge. A decisive close below $117 would indicate that a retest of 2013 may be in the cards.

T-Notes 5-Year

Comex Gold

Hard to say if it will break on the downside or on the upside. Either way, I expect the movement that will resolve this consolidation to be shift and decisive.

Comex Gold

Grains

I have been short ZS twice in the last 3 weeks. As of Friday I am flat: with September Meal going crazy I just do not want to be short November ZS. Soybean contracts may be extremely volatile.

Below I show Corn and Soybean Meal continuation contracts. They are both in consolidation move.

I do not expect to get involved in Grains anytime soon.

Grains Corn

Grains Soybeans meal

Ishares MSCI Brazil Index Fund

No comments here. I’m long.

Ishares MSCI Brazil Index Fund

PATTERN COMPLETED LAST WEEK

Euro/US Dollar

The first target of EUR/USD was acquired last week. As of Friday’s close I’m flat.

I’m expecting a bounce over the next 2 weeks. I will use it to try to re-established my shorts at higher levels.

Euro/US Dollar