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

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

The Weekly Call provides perspective on high-quality setups and trading strategies. Our current performance is showing a more than 277% 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 sugar and looking to possibly initiate new trades in soy, corn, coffee, and silver.

No new entries last week; I am waiting on high-quality setups, and coffee is the first one to arrive. I am planning to enter coffee and natural gas this week. The index trade has been great the last few weeks as the volatility has been worth trading. The China news has added risk to a number of the commodity trades that I am tracking here, especially soy, wheat, and corn, so mind your stops.

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 – Re-entering the Trade

 

2-19 – Last week, I exited both trailers on both soy positions at 1009 and 1022 for nice profits. I am currently flat and waiting for a retracement to re-enter. This impulse ended a minor degree wave three and we did very well with 66% and 133% return on margins on both positions. I like to carry trailers and add positions on a third wave, especially with commodities. I will be watching for a re-entry at 1003s this week. I am expecting higher prices into 1050.

2-25 & 3-4 – Still waiting on the retracement on soy to re-enter the trade. It really needs to get into the RSI 30-40 area to have any chance of a re-entry. If seen, I plan to re-enter the trade. Cycles show bullish action into April. This is a much higher risk entry than the earlier two on this impulse, so I will be waiting for an ideal setup. I don’t mind missing this one.

3-11 – This week, I re-entered the soy trade with 1/2 size position on what appears to be a wave 4. My entry was 1047.75. I am looking higher still into the 1090 area and will add size once a turn is confirmed. Soy still needs a smaller degree 4 and 5 to finish the decline and we may see monthly pivot.

3-18 – Soy looks like it has turned and has made monthly pivot as discussed. It has also broken the declining resistance trend line and I am expecting it to rally from here to the next high window. I will be exiting 1/3 and be moving my stop to even early this week. This is how we manage risk; legging in and out of the trade on the way to target—more on this next week.

3-25 and 4-1 – I exited the soy trade with the news about tariffs at 1028—no sense in holding onto a trade which has this type of headline risk. I will be watching this market with a lot of interest as the news shakes out.

4-9 – Tariff news is still having an impact on the tape. Given the headline risk, I am standing aside for now. Soy has downside risk here after the three up is finished to the trend line. China is the largest importer of US soy and last year imported $14B in soy. Any reduction in demand from China will have a serious implication on pricing across the soy complex.

 

Sugar – Managing the Trade

I am hunting an 18-month cycle low in sugar and we have a reversal pattern in the form of a double bottom. My entry is just 1/2 size to start at 12.88 with risk to 12.50. If the lower low is seen the divergence on RSI should hold and I plan to add size. This may only be a corrective pattern to the upside and if seen we will take profits accordingly.

3-18 – Sugar has seen another legg lower to the support fib at 12.50. I show a new low window in the next few days and am looking for a reversal pattern to add size. I am still expecting a rally into late April.

3-25 and 4-1- I am long sugar and the lower support trendline has just been found on Thursday. I am expecting a reversal from here into the monthly pivot. Once a reversal pattern is seen, this is a good level to add to our position. I will be posting my entry on our private Twitter feed this week. Convert the pivot and we open the late April timing window.

4-8 – Still long sugar 1/2 size and waiting on this week; expecting the bulls to take the tape this week and show us the monthly pivot. On the retest from monthly pivot, I plan to add size once support is demonstrated.

Natural Gas – Re-entering the Trade

 

2-25 – The price action last week tested the $2.70 area as mentioned and has pulled back 50%. This is a decent setup for a rally into $2.83 if the current retracement low holds. Once seen, if $2.70 is supported, we see the rally. I am waiting on $2.70 demonstrated support to add size to the trade.

3-4 – Nothing has changed from last week. The shoulder season for natural is upon us. I wait for the resolution of a. is this a flag and will it break down OR b. will we break 2.74 and convert it into support. We should see the answer this week. I plan to ad size on the conversion of 2.74. There is risk to 2.40.

3-11 – The upper channel trend line was hit on NG and we expected a retrace. Key here is the 2.666 area and this trend line is critical to the rally. Any break of the lower trend line and we open a full retest of the low at 2.40. My lean is still higher on NG even if the low retest is seen.

3-18 – As discussed, 2.666 area is key and the three back last week wend exactly into this area. We have tested the trend line and now it must hold. Any break of the trend line and we open a full retest to 2.40. I am expecting a rally this week.

3-25 and 4-1 – Natural gas has rallied from the recent low and I am expecting a backtest. Since NG broke support, according to our broken trade rules, I exited at the first three wave move higher at 2.712. I may have interest in re-entering this trade if the backtest finds support above $2.60

4-8 – NG is finishing the retest into the  $2.60 area. My plan is to enter 1/2 size at around 2.64 or so which is the three back measurement. This will be a trade into the end of the month or so given the timing cycles. The stop is planned on a break of the current rising support trendline.

 

Live Cattle – Managing the Trade

3-4 – I started a 1/2 size long position in live cattle last week at 124.075, no stop with a plan to add size. I am managing risk here with size, which is smaller than usual. I am looking for a turn this week as we are in the turn window and also at the 100% fib. Nice positive D here which is holding. On a break of 122 or a break of divergence, I will look for an exit.

3-11 – Still waiting on a confirmation of the turn-on live cattle.We may see it this week as we now have closed above 123 and are not yet finished with the first impulse. The key will be the retest and the trend line we have just broken. Back-test the trend line as support and I like the next high window on 4-20 and the 130 area. Break the low and I plan to exit this trade.

3-19 – Live cattle broke the declining resistance trendline last week and has done a full retest of the low. This setup should result in a rally this week. Convert the weekly pivot at 121.975 and I will confirm the turn. Expecting a rally into the mid-April time frame.

3-25 and 4-1 – Live cattle broke the retest of the low and has also broken divergence which created a broken trade. Per our rules, I have exited on the first backtest at $118.15 and am now standing aside waiting for the next setup. Prices have continued lower and I am looking for a potential setup this week for a long into our next cycle date. The next cycle date is in the 4-20 time frame which looks like a simple retest/backtest before seeing lower prices into July.

4-8 – The backtest is occurring in live cattle as discussed and I am expecting higher prices into the timing window of 4-20. This time of year and into June is peak slaughter time and lower prices are expected as supply comes to market. I currently have no position.

Coffee  – Entering the Trade

4-8 – I have been tracking coffee, looking for a turn in this market as the wedge is compressing. Given the price action and the timing window, I will be looking for a turn this week. There is still risk to $114 so any break of the low suggests an exit for now.  The largest coffee harvest in the world starts in May so this move may be short-lived. If the setup works, I see higher prices into the next timing window in early May. A trend line break and conversion of monthly pivot confirm the move.

 

 

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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.


Track Record October 2016 – December 2017 Click Here.

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 CTA (Commodity Trading Advisor), 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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