The Weekly Call – Trade Setups for the Week of November 27th

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 exit with profits in Live Cattle, re-enter long in Gold, take profits in Coffee and wait patiently with our long in Cocoa.

Live Cattle follow up

Bigger picture in Live Cattle, we have been hunting a big turn at a 18 month cycle low. It looks like we called the low.

So far here is what we have done:

— 10-03 – We have a profit potential of $3.80 on 1/3 of a position from the turn on 10/03, we were stopped out on the next move lower to a new low

— 10-16 – We recommended getting long again on the great setup at the Monthly S1 which was near the 100% fib at 95.70 AND at the declining resistance trend line.So far we have a profit potential of $7.90 from this entry. We encourage everyone to take off 2/3 of your position here and place your stop an even for a risk free position.

— 10-30 – We were five waves up and looking for a significant backtest into the monthly pivot at 102.625.

— 11/6 – We have gotten exactly the backtest we discussed. We did slightly penetrate the monthly pivot then broke back above. Depending on where you set your stop you may be out of the trade or you may be holding 1/3 of a position.

— 11/13 – We recommend trailing the stop higher as we expect to see divergence and targets of 108.45 or 110.125.

— 11/20 – Last week we recommend trailing your stop below 107.725 as we expect a higher high and divergence at 110.125 or higher. We have made the full target for the move.

— 11/27 – We are in the high window timing wise and at strong resistance in the 112 area and are expecting a backtest. You should be out of all of your position here with the exception of a very small  trailer with a very tight stop. We expect subscribers to have captured 60% of the swing we suggested which is over $14.20 which for Live Cattle is a max profit of $5,680 per lot.

At this point we are going to pause on any new positions in Live Cattle. We do NOT recommend a counter trend trade and will wait for the pullback into the low window around December 13th or so. We will resume a new long position at that time and will be looking for a new high. The counter trend position assumes more risk than needed, we choose to capture the trend only.

We may have just seen the 18 month cycle low which means we may have a potential trend change.

 

2016-11-27-le-1hCycle Chart for Live Cattle showing cycle alignment

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Gold Support Test This Week

We were hunting a low window in Gold and looking for a 60 handle trade to the upside. So far we have achieved 50 handles :

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.

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.

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Coffee showing a counter trend setup

We are hunting a big counter trend move in coffee and look for a potential entry last week. We called the turn in coffee back in February and called a trend change in June. We have a nice rounded bottom in Coffee on the Daily chart. Five up into the larger degree W means we have a significant backtest brewing.

10-30 – Coffee last week we were looking for two resistances – 167.30 monthly R2 and 168.25 100% fib as possible resistance. Both failed and we have made a new high.

11-6 – We suggested an entry this week and suggested waiting for a lower high and trading against 173.75. If 173.75 is broken we suggest the next entry attempt at the resistance trendline. NOTE – this is a counter trend trade and represents greater risk, on a trade below 165, take off 1/3 and put your stop to even to create a risk free position.

11-13 – We entered short with either an entry at the trendline or at the lower high, depending on your risk tolerance. We suggested taking off 1/3 at 165 and we now sit at the monthly pivot. We suggest taking of another 1/3 here at 158.75, so you should be in a risk free position with 2/3s of your trade in profit. This is counter trade trend so we recommend taking profits quickly and holding a 1/3 risk free position to target.

11-20 – We recommended setting your stop at $169 as we are expecting $153’s next. Low window begins 12/02.

11-27 – We have hit first target and recommend exiting all of your trade except for a small trailer. We are not yet in the low timing window so we expect a big bounce this week and then lower prices into the $150 area.

Depending on your entry, you should have captured 60% of the swing or $14.50 in coffee, roughly a profit of $5,437 per contract.

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Initiating a new position in Cocoa

We are 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.

 

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Have a GREAT trading week!!!

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Written by:

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 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.

27th Nov 2016

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