The Weekly Call – Trade Setups for the Week of January 8th

The Weekly Call – Trade Setups for the Week of January 8th

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 we report back on results. This week we exit our long in Natural Gas, manage other trades in Cocoa and Gold and Coffee.

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Managing the Long in Natural Gas

We are hunting turn from December 18th and a move into the $4 area in Natural Gas. Seasonality is on our side.

12-18 – 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.

12-25 – Per instructions last week, we are long from $3.268 and have already taken off 1/3 of the position at the 50% back area of the last swing down. Our stop is at even and we are waiting on NG to backtest, find support and head higher.

1-1 – We tweeted last week on 12-28 to exit another 1/3 of a position so we are 2/3 off and up over 550 ticks in Natural Gas and waiting on the backtest to complete. We are three back as of this post to the 100% fib and looking to re-enter between here and 3.50 on a higher low. $4.20 is the next impulse higher.

1-8 – Were we stopped out of out last 1/3 position as weather related news created a gap down on January 2nd and a possible flat with support at 3.196. This concludes our trade on the weekly call with Natural Gas, we exit with 550 ticks on 2/3s of a position. The wrap up video is below under completed trades.

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Cocoa – Managing the Long Position

We were hunting an 18 month cycle low in Cocoa in late November – 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.

12-25 – Nothing has changed and we are waiting patiently with 1/3 of the trade in profit with our stop to even. Timing cycles are still on our side.

1-1 – We have been stopped out at even with 1/3 of our trade in profit. We are expecting a lower low and a reversal pattern in the next 7 trading days. We expect another setup and a turn between now and 1-12. Watch for a new low and reversal pattern in the 2060-2080 area.

1-8 – We are waiting patiently on a better setup. A 50% back at 2205 if support is found would be a first possible long. A full retest would be the second option. We wait for a better setup.

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Gold Trade – Hunting a turn and a 300 handle move

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.

12-25 – We are still waiting on the 1111 area OR a higher low. This week watch for a 50% back move and support from 1150. If seen this can be a higher low and a reversal pattern. This pattern can continue lower into the 1111-1105 area which we would prefer to see. Wait for the setup on Gold.

1-1 – Per the Daily Update, we recognized a small day trade long from the weekly pivot last week into the 1165 area. Resistance here and a backtest into the 50 back area, 1143, is a nice short term setup for a long into the 1180 area. Break below 1138 and a new low is likely. This is not yet the setup for the larger long we are hunting as there is still downside risk to 1111-1105. We are still waiting on the US Dollar to make a new high to confirm a turn.

1-8 – The setup at the inflection area has worked and we tweeted out last week to exit 1/3 of a position at the 50% back area and another 2/3s at the three up at 81s. So far we have a profit of 22 handles. At this point with stops at even, we wait on the backtest to resolve. We are looking to add to our position with support at weekly pivot at 68 if support is demonstrated or if broken at 55’s. We are expecting 1232’s if 55’s remain support. A break of 1200 confirms the low is in.

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Initiating a New Position in Coffee

Looking for Wave X and a new high in Coffee. We expected a turn in the 133 area which has occurred and we are 50% back the previous swing. Here is where a decision is likely made.

1-1 If we break 141s likely the 133 area is the low – wait for a three back to enter. If we find resistance between here and 141s then expect a new low in the 126-127 area. In the 126-127 area, wait for a reversal pattern then enter. We are expecting an initial target in the 155 area and may see a new high in Coffee by the end of 2017.

1-8 In the 50% backtest on January 3rd, we entered long per the instructions above and we have taken 1/3 off at 140’s. Our stop is even and we wait for a retest of 140.60 as support. If found we expect the X wave to be complete on coffee and we wait on further upside. A beak of 138.95 risks further downside and of 108.95 is converted into resistance then 126s are still possible, although the odds are less than 30%. We are still targeting 155s

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Happy New Year to All and Best Wishes for a prosperous 2017!!

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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About the Author

Stan Nabozny
20 year retail trading veteran and Co-Founder of The Art of Chart. Specialties include Equities, Options, Futures, Currencies, Bonds, Risk Management, Trader Psychology, Trading Systems and Technical Analysis integrating time and price. See his latest articles here and www.huffingtonpost.com

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