The Weekly Call – Trade Setups for the Week of February 19th

The Weekly Call – Trade Setups for the Week of February 19th

The Weekly Call provides perspective on high-quality setups and trading strategies. Our current performance showing a more than 290% 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 cocoa, soybean oil, and natural gas and looking to initiate new trades in corn, soy, coffee, silver, and live cattle.

Last week, I took profits in my original position in soy, which was a 133% return on margin initiated on January 10th. The second position was also closed at a 66% return on margin. I am now flat soy. A nice wave 3 played out in soy, still has more upside, and I will be re-entering soon. Also cashed out of the cocoa trade and rolled into May, a 56% return on margin. I am over 300% return since inception and looking to make 400% by the two-year anniversary in October 2018. On the downside, I failed to enter the copper trade as described last week, which turned into a BIG move—I refuse to chase if I miss an entry. Also got stopped out on the roll on cocoa which is covered in the notes below.

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

1-7 – I entered soy last week at 962 and am expecting a rally in February. I am already off 1/3 of the position as are 3 up and are past 50% of the previous swing. I am waiting for the trend line support and am looking for more upside this week. Break the trend line and I am out of this trade.

1-14 – After developing a bear flag, I decided to exit the soy trade at 962.75 for a 12% return on margin. Good decision, as the he bear flag has played out lower. I have reentered at the three down target at 952.50 and am waiting on the higher low to add more size.

1-21 – The recent low was a good entry and I have exited my first 1/3 as always at 50% back the previous swing at 969s and the second 1/3 at the monthly pivot 979s. I am now waiting for a pullback into February 1st or so and will add size when seen. February has historically been a bullish month for soy so I am watching the retest this week with interest.

1-28 – Still waiting on the retest and so far I see an “a” wave lower, looking for a three-down to complete around the monthly pivot (the blue line) and then expecting a rally. There is usually a seasonal rally in soy that starts in February. There is no guarantee that it will play out but the chart is aligned with seasonality so looking forward to adding size to this trade this week.

2-4 – I have added size to the trade at 978.50. Chances are that we will see a rally directly OR we will see 973s first and then a rally. I like this trade long through the month of February. Break the .618 and I am out of both the trailer I am carrying from the last long as well as this new position.

2-11 – Last week, I exited my first 1/3 at 984.50 from the new entry from 2-4. On the Sunday open, we have gaped up and I have exited my second 1/3 at 998.25 so I hold a trailer currently on the add from the week of 2-4. I also hold a trailer from January from 952s. I see resistance at 1003 and am expecting a pullback and higher into the 1030 target.

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.

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.

1-7 and 1-14 No entry this week as I am waiting for the crop harvest in the southern hemisphere to play out. I like to wait until all the signals I watch line up. We have a nice reversal pattern here, but chart patterns alone are not enough. I have plenty of time to make money here, so prudence outweighs getting into a trade that seasonality does not support. I will wait another week for an entry.

1-21 – Possible entry this week as I am watching for a pullback 50% or so into 348s. I will be watching RSI and price to look for a reversal pattern. We may see a marginal new high before the retest. I am expecting a rally into May.

1-28 – I missed the entry last week and will not chase, there will be another bite at the apply. At this point, I need to see negative D on RSI and marginally higher prices. The next retest should hold at monthly pivot and this is the entry I am looking for: three back into this area.

2-4 – Still waiting on the retest – wheat is well into the retest now, corn will likely follow. Expecting the monthly pivot (the blue line) as support. Corn needs a little negative D which has now to retest the low. Expecting a pullback this week.

2-11 – Pullback as expected and close to a turn. Looking lower still into at least 360 and more than likely 357. This is a decent area to either add size or initiate a new long.

2-18 – Still waiting for the pullback as mentioned above. Nothing to do but sit on my hands until seen. I refuse to chase, so many other setups worth trading, I will wait for this to mature.

Soybean Oil – Managing the Trade

Soybean oil is a seasonal trade this time of year as there is not another harvest until May. I expected prices to rise steadily through the end of February. I have initiated a 1/2 size position at 33.29 and am waiting on a reversal pattern to add more size to the trade.

1-21 – Soybean oil is usually a seasonal long this time of year and I still like this long into the end of February. My stop is below the triangle trendline and I am planning to add size this week as we have clear positive divergence on RSI. I am a little early on my 1/2 size entry. Soybean oil usually has a decent February along with soy so waiting patiently on a reversal pattern here to add size.

1-28 – The seasonal trend in soybean oil I believe is now in action. I am riding only a 1/2 size position and will hold the trade for now until the retest of the low. Once seen, I plan to double my size.

2-4 – It is time this week to add size. We are now in the retest and likely done here. I am waiting for a reversal pattern to enter. When seen, I will double up my size. We are in a seasonal trend higher and I am expecting the next high in early March.

2-11 – A reversal pattern here has formed, appears to be an expanded flat with a target in the $32 area. At this point, it appears that there is also a double bottom. There is risk to 31.50—I will be looking to add size this week.

2-18 – Soybean oil is at a point of a reversal—it has either already turned and we will see a rally this week or we will see a marginal new low to the trend line then higher prices. With soy in a seasonal rally, bean oil usually follows. I am still holding a 1/2 size position and will likely add another 1/2 size after a confirmation of the turn.

Natural Gas – Re-entering the Trade

2-4 – I have re-entered natural on the pullback into the $2.90 area with risk down to 2.80. My entry was 1/2 size and $2.916. I am expecting a turn and support at $2.80. Any break of $2.80 and I plan to exit the trade as the next support level is lower at $2.60. I plan to re-enter the trade in the $2.60 area if seen. Cycles support a turn this week.

2-11 – Poor entries happen in trading—you see a trend line, expect it to hold, and sometimes it does not. My entry style on this trade was to enter on a three-down and if a small wave 5 developed, I would add size. So my plan was to add on a reversal pattern, which has yet to form. So the good thing that this trade is showing is how to not add size too early. The bad habit this trade is showing is not exiting as planned. Even if the trade is only 1/2 size, the discipline required still calls for an exit. The 5th wave has turned out to be larger than expected. The trade is not yet broken as divergence is holding, two areas I am watching, 2.70 and 2.83. Each can be resistance, if converted this week, we can see 3.20 easily. First I need to find my add spot which requires a reversal pattern. I may exit at one of the resistance areas if manifested. The cycle chart below calls for a turn by 2-13.

2-18 – Still waiting for the confirmation of a turn here which will occur above 2.82. Right now, NG needs to negotiate the $2.70 area which is resistance. There is current risk to $2.40 and a full retest of the low. I am waiting to add size as I want to see $2.70 convert and see a retest that makes sense. Once seen,  I will then add size. For now, I am patiently waiting. I am expecting the test at $2.70 early this week. Massive draws on inventory last week had little effect on price. We are entering the March shoulder season on NG which is usually good for a rally for a few weeks.

Cocoa – Entering and Rolling the Trade

I initiated a swing on cocoa short as posted on our private Twitter feed on 2-5 at 2060. The seasonal production of cocoa between now and May should have a negative impact on price. On the last day of the contract, I waited for a bearish impulse to end and punched out of the entire position at 1970 on 2-13 for a nice profit. I waited for the backtest to re-enter the trade. The next day I re-entered the trade short at 2038 in the May contract and was stopped out at 2071. I waited a few more days for a reversal pattern and found a nice entry at the top of a channel and am now short from 2144 on 2-16. Will be exiting my first 1/3 at 50% back the previous swing which is my standard risk management exit and will move my stop to even. I am expecting lower prices into April.

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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 abacktestt.

 

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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