The Weekly Call – Trade Setups for the Week of August 20th

The Weekly Call – Trade Setups for the Week of August 20th

The Weekly Call provides perspective on high quality setups and trading strategies for the coming week. The purpose of this blog is to demonstrate how to swing trade futures using our methodology to select high quality setups and manage the trade with our risk management approach. This week we manage our trades in Silver, Natural Gas, Corn, Soy, Wheat, and Live Cattle

Our goal in this blog is to generate a 200% return in less than a year by swing trading futures. All trades posted here are discussed in detail on our Daily Update subscription service. Our track record is now posted below under Completed Trades. See some of our completed trade videos below.

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Silver – Managing the Trade

Silver appears to have made a 40 week timing cycle low on 12/20/2016. We captured a long in metals in Gold on the first impulse up and exited on 2/8/2017 with the last 1/3 of the trade capturing 94 handles. We do not believe in counter trend swing trading unless it is a move of a month or more. We have been patiently waiting on this back test in metals to enter long.

6-11 – Trend line break as expected and movement lower into our timing window. Expecting a higher low to the monthly S1. We are standing aside and waiting for the setup.

6-18 – As discussed, lower low and a decent setup. Metals in a nice position here to rally. I’m expecting a lower low here as I am expecting a rally in the US dollar. Waiting on the lower low to 1632 and a reversal pattern to enter he trade. I will tweet out the entry when seen.

6-25 – As mentioned last week on the Daily Update service, we decided to stand aside on metals as we are still expecting a rally in the US dollar. This morning we made a lower low on Silver and are watching for support at 1600 and 1568. We will enter the trade when we see the US Dollar near it’s expected target and a reversal pattern on Silver.

7-2 – The plan above has not changed and we have lower prices on Silver. USD rally is underway and possible turn is brewing on the chart below. Watching 1600 and 1581-1561. Positive D is setting up.

7-9 – Silver targets have been achieved, price is at the trendline this morning. This is a likely turn area, I am watching for a reversal pattern for the entry. Watch for our entry on twitter.

7-16 – We entered silver on the higher low as discussed on the Daily Update at 1548 and have exited 1/3 and 50% back the previous swing per our risk management rules and stops are at even. We are 5 waves up and I am looking for a back test into the lower trend line at 1580 or so. Find support there are we see 1692 in the first week of August. This can be a flag and any break of the lower trend line, we will exit this position and look to re-enter.

The US dollar is getting close to the $94 target we have been expecting which will have an impact on the silver rally. The monthly pivot test at 1692 is key to metals continuing to advance. We may see a full retest from there. Stay tuned for more.

7-23 – I am looking for a turn in the USD in the next 5 trading days which means the silver rally should reverse for a pullback. I will be exiting another 1/3 sometime Monday or Tuesday and holding the last 1/3 to target 1692. I still expect silver to advance into at least the 1680s.

7-30 – Silver has achieved our first target area, the yellow box marked on the chart. I have taken 2/3s in profit on the way up and exited my second 1/3 at 1644 as posted on our private twitter feed. Later this week I am expecting a pullback in precious metals and a rally in the USD. At this point I plan to hold the remaining 1/3 and plan to add lower if support is found in the 1603 area.

8-6 – As mentioned above, the turn happened as expected and now we are in the 1603 area. This is a critical juncture for precious metals as DX is begining to rally. If we break 1581 then we are going to see a full retest of the low. I will be watching the DX rally this week. We still hold 1/3 of a position long and may add to our position once we see the setup for a turn.

8-13 – Expecting a turn early this week for Silver to back test the weekly pivot at 80 or see the trend line. Either way I expect new highs by the end of the month. Position is still long 1/3 size.

8-20 – No change from last week’s comments – looking for support at 80’s or the trendline and expecting 1770. Position is still long 1/3 size.

Natural Gas – Managing the Trade

Natural Gas has been in a basing pattern for over a year and I am looking for a turn in the next week or so. Cycles say this is an 18 month cycle low, we have a reversal pattern, an IHS with support at $2.92. If this breaks down I am looking for $2.80. Center date for the turn is 7-10. Watch the twitter feed for our entry.

7-9 – Natural is ready for a turn – looking for a new low and positive D and a print of $2.80. Risk in this trade is to $2.73. Looking to enter this week.

7-17 – Natural did not make a new low and we are still waiting to enter – the turn window ends on 7-21. If a new low is not seen we will enter on the next back test. The setup looks good for a rally into Sept.

7-23 – I plan to enter Natural on the current pullback on Monday and start a 1/2 size position with room to add at $2.80. Good cycles through September should push price higher.

7-30 – As mentioned above I entered NG at 2.939 last week and plan to add lower if seen in the $2.80 area. There has been NO CONFIRMING PRICE ACTION that this is a turn or that the turn is in place. At this point cycles are calling price higher and we are waiting for a confirmation.

8-6 – I added anther 1/2 size position last week as mentioned on our private twitter feed and discussed in the Daily Update video. Currently I see NG in a small 5th legg lower with positive divergence and I am expecting a turn this week. There is risk to the Monthly S1 pivot at 2.683. A break of weekly pivot at 2.809 is a positive sign, break the upper channel trend line and we confirm a turn.

8-13 – As mentioned above, we broke and converted the weekly and monthly pivots and the declining resistance trend line. We have taken 1/3 in profit and stop is at even. Looking this week for a back test of weekly/monthly pivots to convert to support and the next impulse higher. Still expecting $3.40 in Sept.

8-20 – Still holding 2/3s of a position long and waiting for a three up to 3.12 to exit another 1/3. Still expecting $3.40 by Sept 14th or so.

Corn – Managing the Entry

Corn has already broken out and we have been waiting on the back test and a reversal pattern for the next impulse. The problem with breakout trades is the back tests are always bigger than you expect. We entered on 7-17 at $379 with at 1/2 size. If we see a lower low to $370 we will add. If this breaks down we have support at 364 so a decent risk reward ratio given we are expecting new highs in the coming months. We will be adding to this entry later by increasing size, even if we don’t see a lower low.

7-23 – We exited 1/3 of a position in profit at $386 and are currently waiting to see if the trend line breaks down. If so we plan to exit this trade. Corn has an alternate which is a full retest at $360. If seen we are buyers. I’ll be tweeting out the exit on Monday if the breakdown begins. If support holds here, I am expecting a new swing high in Corn.

7-30 – We were stopped out at even and exited the corn trade with 1/3 in profit. I plan to re-enter lower in the $360-364 area. This is a volatile time of year in grains and more volatility is expected. I am waiting on the next reversal pattern to get long again.

8-6 – Almost there, now trading December and waiting on a the setup. Nice positive D here. Lower low to $370 would work. I need to see a reversal pattern this week.

8-13 – Corn hit target last week and I entered with 1/2 size per the post on our private twitter feed. There is no reversal pattern yet and this could be a wave 3. Waves 4 and 5 if seen, I will add another 1/2 size or will add on the higher low. I am using 1/2 size here to manage risk.

8-20 – As mentioned last week, our initial 1/2 size entry was at the wave 3 low. We have completed the wave 4 and now finishing wave 5. I am expecting to add the other 1/2 size this week when we see a reversal pattern.

Soy – Entering a Breakout

Soy is another commodity where end of quarter money was put to work. I have been waiting patiently for the back test to enter the trade. I plan to enter on the next lower low. Soy has been in a multi-year triangle and our original target was $900 on the weekly chart. We came very close to that low before the turn occurred. At this point, the back test is almost complete and we are waiting on the 50% retracement at 979 with positive divergence on RSI. Watch for our entry on twitter.

7-30 – I am waiting patently on the setup in Soy. When entering a breakout trade it is often difficult to wait for the consolidation period to end. See Wheat below as a good illustration of what happens when you don’t wait for a strong setup! At this point, cycles say lower prices are expected so I will wait for $979 and a reversal pattern.

8-6 – Currently appears that Soy is finishing a flag for a smallish wave 4. Looking for the last legg lower into 950. Nice positive d is expected to hold on the next decline. Cycles say a turn this week.

8-13 – I entered Soy last week at the end of the trend day lower and we have hit target at 950 and then some. As mentioned on our private twitter feed, this may be a wave 3 so we entered 1/2 size to reduce risk. We are now seeing wave 5 play out with divergence on RSI. Waiting on the reversal pattern to add the other 1/2 size. Bigger picture we have a large multi-year triangle and and expecting a big rally into next year.

8-20 – Soy appears to have turned and I am waiting on the larger reversal pattern to add the remaining 1/2 size to my position. Expecting to find resistance at $956 and looking to add the remaining 1/2 size to the back test from there.

Wheat – Entering a Breakout

Wheat has seen quarter end money flow into it like corn. This is the time of year for grains to be at their lowest prices as farmers begin a new agricultural year. There is a lot of volatility with sales, new hedges, etc coming into the market. I am expecting Wheat to find it’s footing here and I am expecting a rally into October. I entered long last week per the private twitter post at 501 and am holding the trade until either divergence breaks or the support trend line breaks. On a break of the trend line, I will be watching the Monthly S1 pivot for support.

7-30 – My entire position has been stopped out last week at 482 and I am now waiting for a lower low and a reversal pattern to re-enter. As mentioned, the consolidation pattern after a breakout is often difficult to find the right entry without adding risk to your portfolio. I am managing this portfolio with the idea of limiting my maximum draw down to not more than $3200. In this case, I was looking for both the monthly pivot and the .618 retracement for support and both failed. I will wait patently for the next setup depicted below and I will likely be long again later this week or next.

8-6 – At this point, I am waiting on a reversal pattern. Nice positive D here on Wheat, the formation needs a lower low just to 52s or 46s before we see a turn. There is risk to 439’2 and the monthly S1 pivot. Being patient here and waiting on the setup, I expect an entry this week.

8-13 – As per Corn and Soy, I entered another 1/2 size last week in Wheat. Nice trend day and likely end of wave 3, if 4 and 5 are seen then I will add remaining size after the reversal pattern is formed. I normally do not trade both Corn and Wheat as it is basically the same trade. So technically I already have a full position at risk. With this being the case, any adds will be done after reversal patterns are well defined.

8-20 – As mentioned last week, our initial 1/2 size entry was at the wave 3 low. We have completed the wave 4 and now finishing wave 5. I am expecting to add the other 1/2 size this week when we see a reversal pattern.

Live Cattle – Entering the Trade

Live Cattle is an old friend and it’s time to consider a long. A nice three wave move into the low window and also 50% back of the whole formation. I am 1/2 size long here per my post on our private twitter feed and looking for a reversal pattern. Expecting a turn this week as we are well into the timing window.

8-20 – First 1/2 size long was a little early, likely the low in RSI is a sign of wave 3 completion. We are now in wave 5 and expecting a turn between here and 102.625. I will add the remaining 1/2 size to this position when a reversal pattern is seen.

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Have a GREAT trading week!!!

COMPLETED TRADES

Track Record of Completed Trades

The purpose of this blog is to demonstrate how to swing trade futures using our methodology to select high quality setups and manage the trade with our risk management approach. This track record is based on entries and exits as posted in this blog using a $50,000 account limited to a three contract position size. We will increase position size after we generate a 200% return. See the videos below for more information.

 

Completed trade in Cattle as of November 28th

We expect subscribers to have captured 60% of the swing in Live Cattle which is over $14,500 in profit using a margin of only $5,115. A great example of using leverage in futures.

Completed Trade in Coffee as of December 12th

The total swing was $37.00 and we expect subscribers to have captured 60% of a wing or $22 in Coffee for a profit of over $25,500 using a margin of $8,850. A great example of using leverage in futures. See the video below for the review of the trade.

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Completed Trade in Natural Gas as of January 2nd

We were 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 with Natural Gas, we exit with 550 ticks on 2/3s of a position with $8,500 in profit.

Completed Trade in Coffee as of January 19th

We exited the Coffee trade on January 19th with $17 or over $15,000 in profit using a margin of $8,850. A great example of using leverage in futures.

Completed Trade in Gold as of February 8th

We exited the Gold trade on February 8th with over $14,000 in profit. We entered on January 3rd and held the trade into the high window. We will re-enter Gold in a few weeks after a back test.

 

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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. His specialties include using futures and options to trade Commodities, Equities, Currencies, Precious Metals and Bonds. 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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