The Weekly Call – Trade Setups for the Week of December 18th

The Weekly Call – Trade Setups for the Week of December 18th

The Weekly Call provides perspective on high quality setups and trading strategies for the coming week. We carefully select these setups due to their quality and profit potential and report back on results. This week we initiate a new position in Natural Gas, manage our long position in Cocoa and review the setup to re-enter the Gold long. Trade reviews are posted at the end.

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Initiating a new position in Natural Gas

We are hunting turn and a move into the $4 area in Natural Gas. Seasonality is on our side. We have support at 3.110 and as early as 3.240. We are waiting on a higher low in that area with positive RSI divergence. A cross of the RSI trendline will confirm the setup of RSI divergence. We plan to enter on a higher low. We see a positive trend in timing cycles after December 22.

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Cocoa – Managing the Long Position

We were hunting an 18 month cycle low in Cocoa – this is a very volatile commodity and we suggest trading this only if you are experienced in commodities and risk management. There is a likelihood that this low can be the beginning of a change in trend for this commodity.

11-20 – On the Daily chart we have hit our target area of 2383 and expect to find support. There is still downside risk to 2231. We recommend initiating a position on a higher low and expect to take 1/3 off our position at 2531 and set our stop to even. If we are stopped out below the current low we will look to re-enter at a higher low closer to 2231. The cycle low window ends on 11/23.

11-27 – We are still hunting the low and are currently long with a stop below the low. Waiting on 2531 to take off 1/3 and place out stop at even. There is still downside risk to the trendline. If seen, we will be stopped out and will reenter at the trendline below.

12-5 – Nothing has changed, we are still currently long with a stop below the low. Waiting on 2531 to take off 1/3 and place out stop at even. There is still downside risk to the trendline. If seen, we will be stopped out and will reenter at the trendline below. Timing cycles look positive.

12-11 – We were stopped out of our previous trade below the low and have already re-entered the trade at the trendline as mentioned last week. Timing cycles on the cycle chart below look very positive and we are staying the course on the cycle low. Our stop is below the current low.

12-18 – We  tweeted on 12/14 to exit the first 1/3 of the long since we were 50% back the first swing while placing stops at even. At this point in the trade, we wait and see what happens at the current higher low. If we are stopped out we will wait for the next long setup. We can see three up to 2368 if we make the turn. This is an inflection point, the next two trading days will decide if this setup worked as planned.

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Gold Trades – Still hunting a 300 handle move

First trade – we were hunting a low window in Gold and looking for a 60 handle trade to the upside. We achieved 50 of the 60 handles. See that trade below:

10-16 – We recommended a long in Gold on a higher low setup at 1252. So far we have $32.00 of profit potential.

10-30 – We recommended taking 2/3 of your position in profit and setting your stop to even for a risk free position. We expect subscribers to have captured 60% of this swing. So far in gold we have $5,000 in max profit.

11-6 We suggested looking for a small divergence legg higher to 1318 or so to form negative D on RSI then a definition backtest. If the backtest finds support at the monthly pivot inflection area at 1279, then we would add to our long position and expect 1320’s next.

11-13 – We found ourselves with support at 74s and an impulse to 1338. Depending on where you set your stop, you may or may not have benefited from this move. At this point we are stopped out of our long in gold, having captured 50 of the 60 handles we forecasted. At this point we are standing aside in Gold, waiting for a better setup for another long. We expect to see support in the 1200 area with divergence to re-enter another trade long.

We are now hunting a larger 300 handle trade to the upside and are looking for the entry.

11-20 – This week we recommend entering a long in Gold. There is still downside risk to 1180 so size your position accordingly. We are re-entering long on the thesis that this is wave X and we are in a low time cycle window. The timing cycle low window ends on 11/23. A break of 1229 is needed to create enough separation from the low to confirm the next impulse higher. Any resistance at or below this level risks another legg lower so take 1/3 profit at 1216 and set your stop to even.

11/27 – Per the instructions last week, you should have exited 1/3 of a long position at 1216 and then gotten stopped out on the next move lower – this is how we manage risk on a turn, take a small profit 50% back and place your stop at even for a risk free position. We have seen the downside risk we mentioned last week to 1180 and are recommending a re-entry. A break of 1200 opens the upside to our first target at 1300.

12/5 – So far we have two trades above where we have made 50 handles on 2/3s of a position and 8 handles on 1/3 of a position. We are now looking for the larger degree X wave for a larger move – 300 handles – to the upside which requires a break of 1200. Our last attempt at a long on 11/27 was stopped out so we are standing aside and waiting on a better setup and reversal pattern in Gold.

12-11 – We have a much better setup in Gold this week so we are going to try the long again. We are looking for a 300 handle trade to the upside, look for support between 1150-1156 and enter on a higher low. Place your stop below 1150. Timing cycles are very positive here, see the cycle chart below.

12-18 – We took 1/3 of the trade as we were 50% back 1167 but we were stopped out of the balance of the trade. We are waiting for the next setup to get long again. Watching the 1111 area for a bounce and a higher low. Enter on the higher low and place your stop below the low. Take your first 1/3 50% back of the last swing and place your stop at even. Timing cycles remain positive.

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Have a GREAT trading week!!!

COMPLETED TRADES

Completed trade in Cattle

Following up on our completed trade in Cattle last week please see the video below for our thinking behind this trade. We expect subscribers to have captured 60% of the swing we suggested which is over $14.00 in Live Cattle for a profit of over $5,680 per lot.

Completed Trade in Coffee

This week we are in our low timing window in Coffee and we are recommending an exit on out last 1/3 position. The total swing was $37.00 and we expect subscribers to have captured $22 in Coffee for a profit of over $8,000 per lot. See the video below for the review of the trade.

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Year End Review

Coming later this week.

 

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About the Author

Stan Nabozny
Stan is a 20 year retail trading veteran and Co-Founder of The Art of Chart. A registered Commodity Trading Advisor, his specialties include using futures and options to trade Energies. Precious Metals, Equities, Currencies, Bonds, Softs, Grains and other commodities. Stan believes that Risk Management and Trader Psychology are more important that technical analysis and spends his time teaching and coaching other traders on these topics . Stan uses various trading systems and technical analysis approaches that integrate time and price in his work. See his latest articles here and www.huffingtonpost.com.

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