The Weekly Call – Trade Setups for the Week of May 13th

The Weekly Call – Trade Setups for the Week of May 13th

The Weekly Call provides perspective on high-quality setups and trading strategies. Our current performance is showing a more than 279% 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 Lumber, Lean Hogs, Soy, Coffee, Live Cattle and Silver.

Last week I was stopped out of my second entry in Sugar with 1/3 of a leg in profit. This week looking for a reversal in Sugar.  I am watching for setups in Lean Hogs, Silver, Live Cattle and waiting on setups in Soy and Lumber. Still waiting on the setups to mature. Watch the twitter feed for entries.

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

 

4-29 – Given the current state of the impulse and also the risk reward of this trade, I am going to hold off on any longs for now. I really was not very aggressive with this entry and as a result I may have missed the last impulse higher. I may look at a short trade here in the coming weeks so I will continue to post Soy for the next month to track the cycle date and the next turn lower.

5-6 – The turn on Soy and also the larger soy complex may be occurring now. A retest early in the week into the weekly pivot demonstrating resistance is a possible sell. Commercial sentiment is short and I have a cycle low into the end of June so expecting lower prices to as low as 990.

5-13 – As discussed, a move lower has played out. We are in a flat heading lower in a 5 wave sequence. We have just finished wave 3 and I am expecting a pullback into the 1030 area and a lower low into 980-990.

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.

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.

4-22 – Sugar is near a turn this week and I like the $11 area for the turn. I am looking for a lower trend line touch or a reversal pattern in order to add size to the trade. The May high window should break the wedge trend line which will confirm a turn in Sugar. The reversal pattern should set up early this week.

4-29 – I have doubled my size in Sugar at $11.34 and it appears we may have a turn. For now we are three up and a re-test down to $11.45, the weekly pivot, should call price higher into $12.50s by May 12th. Divergence has held so we have a candidate low. Time will tell if this is the turn or just a flag setting up a lower low.

5-6 – I have taken 1/3 off the Sugar trade in profits at 11.80 and am watching with interest the current test of the support trend line. If it holds we likely see the next legg higher into 12.25-50 or so. If it breaks, there is risk to 10.50. Bigger picture, I am looking for a major turn in Sugar and higher prices. So far the structure is very flaggy, so the declining resistance trend line is key this week.

5-13 – Sugar has traded lower and I have been stopped put of my second entry at 11.34. I continue to hold my original 1/2 size entry and plan to add lower. Target are 10.50 and possible a double bottom at $11.00. From a timing standpoint, sugar is past the low window of 4-24 so I am expecting a double bottom this week and a turn into $12.50

 

Live Cattle – Entering the Trade

 

4-8 – The back test 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.

4-22 – The back test in three waves is still in progress in Cattle, looking for either 108 or 110 for resistance as we likely have another wave lower into July. Cattle slaughters and supply at a peak now through June which should push supply into the markets and depress prices further.

4-29 – The entry may come this week as I am patiently waiting for the three back to complete into the 109.20 area to complete the flag. The next legg down should see at least a double bottom at $97. Timing Cycle chart shows the end of June for a potential timing target.

5-6 – Still setting up as cattle is nearing the three wave up high. The rising wedge should break down in the coming weeks as the slaughter is at it’s peak and supply is entering the market. A break of the lower trend line and cattle has started the next legg lower into the end of June.

5-13 – We have a higher high and now negative D on RSI. Likely we see a turn this week and marginally higher prices into 109.20 before the turn. Looking for a setup for a trae into the low window into the end of June.

 

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.

4-22 – I am still looking for the setup to enter Coffee, so far no reversal pattern. The fib at 114.10 is a target area where we should see a setup between now and May 12th. The entry with Sugar should occur first. I like a rally here in Coffee through July.

4-29 – No entry as we now have broken the trend line without any divergence. I am still waiting on the setup and am expecting lower prices. This time of year there is the Brazil harvest and supply will likely depress prices further so I am standing aside and waiting on the setup in Coffee. Timing Cycles are pointing to early May for a lower low and a possible turn. Some say this is the hard part of trading, waiting on the setup. If you are scanning the market and looking at various setups it is not hard. It is like shopping in a grocery store choosing which ripe melon you want to take home with you. Patience here is key to trading commodities.

5-6 – As per my previous comments regarding the harvest, I am standing aside and watching this retest with interest. Find support above 118 and likely we see a rally into July. This does not fit with seasonality, so I am expecting 118 to convert into resistance and see lower prices into 114s.

5-13 – A small retest is needed at this point into 120s and then lower prices expected into 114s as mentioned. This is the perfect area for the alternate to play out which would be a rally into 130s. Although my lean is lower, I am watching for the possible alternate this week which would play out Monday/Tuesday if seen. Given the seasonality, I am expecting this to continue lower into 114s and setup a turn in the next week or so.

 

Lumber – Entering the Trade

4-29 – I am putting up lumber as a potential short to consider in the coming weeks. The impulse here has been strong and is nearing exhaustion. As you can see from the chart below Lumber is in the five up into the 556-581 area which should be the end of the five up sequence. I am looking for negative D to set up an entry. I am looking for a turn roughly around 5-2 and am expecting 428 as a target for the move.

5-6 – Lumber continues to extend it’s move higher and I am now looking for the small pullback and a higher high to form neg D on RSI. Once the negative D is seen with a reversal pattern, I’m planning to enter. This type of rally is one to be careful with, a clear reversal is the time to enter an instrument in this type of situation. Catching a knife as they say is not fun, so I plan to watch and wait for my entry on a great setup which will come. Commercial Sentiment is interesting here, let see what this weeks brings.

5-13 – No divergence yet and we are now at target 596s. We need to see a wave 4 and 5 to finish the pattern so higher prices are called for. I am expecting a pullback into 5-30 timing window so looking for a setup this week. No position as of yet.

 

Lean Hogs – Entering the Trade

4-29 – Lean hogs is an interesting chart and is setting up for a rally. A lower low into my cycle date get me long with a target roughly in the $90 area. I like the commercial and retail COT positions here and I also like the seasonality long into June. I will be posting my entry on lean hogs and the other commodities listed here on The Art of Chart private twitter feed.

5-6 – We are now past the cycle window and may have turned. The current price action may be the retest. I like this long and will be looking for a possible lower low to set up positive D on RSI. Commercial sentiment favors a rally here.

5-13 – So far so good on the rally. Expecting continuation higher into the 6-11 high window. The monthly pivot at 74.025 must now hold as support.

 

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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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