The Weekly Call – Trade Setups for the Week of December 31st

The Weekly Call – Trade Setups for the Week of December 31st

The Weekly Call provides perspective on high-quality setups and trading strategies. Our current performance showing a more than 200% return since October 2016. 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 I am managing trades in live cattle, coffee, and natural gas, and look to initiate new trades in soy and corn.

I will change this blog next week to post all trades that I make during the World Cup Trading Championships here on this site. My goal in the competition is to exceed the returns that I have achieved here.

All trades posted here are discussed in detail in our Daily Update Subscription Service and posted on our private twitter feed. Our track record is posted below under Completed Trades. See some of our completed trade videos below.

The trades below are discussed on the Daily Update: Click Here for a FREE Trial

 

Soy – Managing the Trade

 

11-26 – Nice rally last week, have encouraged subscribers to take off 1/3 in profit and hold the rest. Looking for a second 1/3 early this week at 1004. There is a strong low window around December 5th which appears to be another buying opportunity. Still expecting the rally to continue into early January.

12-3 – We have reached the backtest target at monthly pivot and I am expecting a move higher to break the $1004 ceiling. This week, soy needs to get bullish and convert 1007 to begin the impulse higher into 1050 or so by January 2018. Watch for resistance at 1020. I am still carrying a trailer.

12-10 – Last week, we rallied and broke the 1004 ceiling as expected and made 1017s, the 100% fib. I encouraged all subs to take off 2/3 in profits as a backtest was looming. The backtest thus far has found support at the monthly pivot. I am expecting support here at 85s and a rally higher or a quick trip to 974s before we see the next impulse. I added size last week at 992.50 and am waiting for the next impulse higher.

12-17 – The added size last week was stopped out and I attempted another long at support at 973 with a tight stop that was also stopped out. At this point, soy may be in a triangle, I am waiting on resolution and plan to re-enter the trade as we have a bullish window into January. I will be looking for another reversal pattern.

12-24 – No position currently—still waiting or an entry. Risk to 936 exists, looking for a setup between Friday’s close and 936. Needs to hold Pos D and see a reversal pattern here to enter. Timing cycles here are bullish.

12-31 – No position currently, but a reversal pattern has formed and I am looking to initiate a position early this week. The light tape last week as formed a double bottom on soy and I am expecting a conversion of the weekly pivot this week. This will be price confirmation of a turn.

Live Cattle – Managing 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.

12-10 – Live cattle is setting up for a long this week, I am looking for a reversal pattern at 116.675 and am looking for a rally into the high windows of 12-28 or 1-9. Difficult to tell which is which until the turn is set. Minimum rally expected is into $127 and we could get liftoff into 135s if we are fortunate. I will be posting my entry on the Art of Chart private Twitter feed early next week.

12-17 – I have a new position in live cattle as discussed last week, initiated at 118.50 and I have already taken off 1/3 at 120.75 and my stop is at even. I am looking for a strong move higher as we have a timing window that calls for at least $126-127 as a price target. I am a hold for now until I see significant resistance.

12-24 – Bear flag looking structure, my stop on the remaining 2/3s position is below the retest at 118.15. If the position gets stopped out I will look to reenter in the 115-116 area next.

12-31 – Last week, I have taken another 1/3 in profit early as this is a flaggy looking structure. There is risk of a new low. If we break out to the upside, I will add back once I see a confirmation. For now, I’m managing risk with size and in a risk-free position with my stop at even. A retest is expected this week.

 

Natural Gas – Re-entering the Trade

10-22 – On a news-driven move on Thursday, NG went lower quickly and I took the opportunity to double my size at 2.783. The reason I doubled size is that this type of move lower is often followed by a squeeze, which did occur. By the end of the day we were printing 2.892 and I decided to exit the whole position at a small $300 loss. Given the news, the next day would go one of two directions, a new low or a 50 back and higher prices. Having “reset” my position, I looked for an entry on Friday and saw support at 50% back and am now long 2.875 a 1/2 size position.

I call this sequence in trading lowering my basis. When a trade goes against you, your options are to capitulate or look for a creative exit and possibly re-enter lower. News-driven days often demonstrate a V type pattern so I was fortunate to catch the low and punch out at good levels.

The story on this long is incomplete as the market needs to convert the monthly pivot to show bullish signs. I am long and will be rolling this position into the December contract next week.

10-29 – I re-entered the trade on NG at 2.875 with a 1/2 size position on a 50% pullback from the previous rally. On the next rally as I usually do, I exited 1/2 of the position at 2.990 after we retraced more than 50% of the previous stop near the trend line. The trend line has been hit six times and is very solid and we have rejected to new lows. I am stopped out and will wait for the next setup lower on NG. Base hits like this looking for the low are just fine, I’ll continue to do this until I find the turn. I am looking for the next reversal pattern marginally lower at 2.935ish.

11-5 – I re-entered the trade on NG at 2.905 with a 1/2 size position and exited the first 1/3 per my post on our private twitter feed 50% back the previous swing as I usually do at 2.924. So why only take 20 ticks? Because this is my discipline. I could had done a better job with the entry so this is why the profit is not larger. From my perspective trade discipline is trade discipline, so no matter how small I am following the 3P method. I am looking for a three up to take off another 1/3 and plan to hold the balance into Mid December. I am expecting a pop higher in natural gas into $3.10ish where I will take my second 1/3.

11-12 – Per the plan last week, I took another 1/3 in profit a little early at 3.066 and exited the trailer at 3.201 so as of now I am flat. Nice trade and first impulse off the bottom. I am expecting a decent retracement this week and I am standing aside as my practice is to capture the trend which is up until mid-December. Looking for another entry somewhere in the 3.07 area and NG can go deeper into $3.00.

11-17 – Now trading Jan contract and waiting on $3.10, likely we will see it this week and I plan to enter after a reversal pattern is seen. I am looking for a long into the December 15th time frame.

11-26 – Holiday Globex trading sometimes creates exaggerated moves. This is the case in Natural Gas. Friday we have a flush lower on low volume and I am expecting an immediate reversal higher and a test of the Weekly Pivot. Convert this pivot into support and we begin the rally, convert into resistance and we will see a lower low with positive D. I am expecting a rally in NG in the next few days. I added a 1/2 size position earlier in the week at 3.131 and am waiting on the resolution of the pivot test. I plan to add more size on a lower low if seen.

12-3 – A nice move last week on Natural, I took off my first 1/3 at 3.149 which was 50% back the previous swing which is my discipline and also another 1/3 off at 3.202. Expecting a backtest, I waited and added more size at 3.079 and have taken a small profit at 3.100 which is 50% back the previous swing. I am expecting a move higher into 12-12 to 3.323 and am a hold on all positions.

12-10 – Last week NG broke the $2.999 pivot and we exited our longs at 2.991 at a loss. We were looking for support at 2.90 and tried a 1/2 size position and were immediately stopped out. I am still expecting a rally. This week we have an excellent setup showing positive D on both daily and intra-day charts. NG is also against an important trend line. I am expecting a rally into 1-7 with a target at $3.10 and plan to enter the trade Monday after a larger reversal pattern presents itself.

12-17 – I entered NG with a tight stop of Monday with no luck, I was immediately stopped out. I waited for downside exhaustion and started a new position 1/2 size which is my method for managing risk through size. I added to a full position on Friday and my average is 2.656. I am a hold and am expecting a Sunday gap up and a rally. I am looking for the rally to continue through 1-7.

12-24 – The Sunday pop last week lead me to take 1/3 off my position at 2.741 and place my stop below the low. This week that stop was elected on a stop hunt in a single 5-minute bar. Having seen this before on NG, I re-entered the trade at 2.635 and am still expecting a rally. There is risk to 2.35 and if this price is seen, my plan is to add size.

12-31 – I am still long and expecting a fifth wave higher into the 3.050-3.100 area. When seen I plan to exit my second 1/3 and hold the balance at even stop. I am expecting a retest this week.  The $3.00 area is a key support as is $2.85. My plan is to add size when these areas are seen. Currently, I am in a risk-free position.

 

Corn – Planning the Entry

Corn is getting close to a reversal pattern and I am planning to enter sometime this week. Either corn is going to double bottom or just break out to the upside. I plan to enter on the pullback if the breakout is seen. Members of our private Twitter feed see the actual post for the entry and all trades are reviewed on The Daily Update Video.

11-19 – Nice movement into our target area at 336’4 – nice reversal from that area and now waiting on the retest. Once seen, we enter long corn and plan to manage the trade into January.

11-26 and 12-3 – Still waiting for the setup. Right now we have a potential reversal pattern which can break lower as a triangle thrust. I am waiting to see the resolution of this swing lower. If we break the monthly S1 (the green line) we likely head lower directly and I will wait to enter in the $344 area.

12-10, 12-17, 12-24 No changes and I am still waiting for the setup. Looking for a turn and a conversion of monthly pivot to confirm the low. Looking for a higher low this week and the larger reversal pattern to initiate a position.

12-31 Patience pays. I have waited for the setup and it has finally arrived. We may still see a small wave C for the three down that is currently incomplete, but the inflection area is near and a reversal pattern is almost fully formed. I am watching for an entry this week.

 

 

Coffee – Managing the Trade

 

11-26 – Last week, I entered coffee at 126.25 and we have seen a nice impulse higher. I have already scaled out 1/3 in profit at 128.90 and my stop is currently at even. The 50% back the previous swing area is ideal for taking initial profits as this is often a reversal area. At this point, I am waiting for a conversion of the Monthly Pivot (the blue line) as confirming price action and am expecting higher prices into March of 2018.

12-3 – I managed to take another 1/3 in profit last week at $131.70 as posted on our private twitter feed, stop is still at even. I expected a backtest which has happened and am waiting on confirming price action above weekly pivot to add more size. We have risk here to $126.00, watch for another legg lower. I am still expecting the rally into 12-15.

12-10 – The trailer I was holding was stopped out this week on a quick move lower, which is why we use the 3P method for managing risk. So we exited with 2/3s in profit and are looking for our next entry. The low window on 12-12 and the trend line just below may prove to be the setup we are looking for. There is a smaller reversal pattern on a 5-minute chart, any conversion of 124.90 signals the upside. I will be looking for an entry early this week.

12-17 – As mentioned last week, I entered coffee at 121.85 and am expecting a rally. Last week I exited the first 1/3 for a small profit as we are three up and in a possible flag formation. I am expecting a break out to the upside this week and I will sit and be patient this week to see what coffee has in mind.

12-24 – The flag has broken down and I am still in the trade. Looking for an exit at weekly pivot if resistance is seen. At this point, it is a 50/50 if we break down or rally. Tuesday price will decide. If last week’s low is broken, I will exit the trade.

12-31 – Last week I took a second 1/3 in profit as we are now in a flaggy structure and in a three-up structure. A retest is expected this week and I will be looking for support in the 123.50 area. Any beak of the lower channel trendline and we open new lows. I am even stop and in a risk-free position.

 

 

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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.

There is a substantial risk of loss of capital when trading and/or investing. Past performance is no guarantee of future results. See our disclaimer here.

 

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 backtest.

 

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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