The Weekly Call – Trade Setups for the Week of June 3rd

The Weekly Call – Trade Setups for the Week of June 3rd

The Weekly Call provides perspective on high-quality setups and trading strategies. Our current performance is showing a more than 284% 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, Natural Gas, and Gold and looking to possibly initiate new trades in Lumber, Lean Hogs, Soy, Coffee, and Live Cattle.

All trades posted here are discussed in detail in our Daily Update Subscription Service and posted on our private Twitter feed. This past week, I exited my first 1/3 in profit on Natural Gas and am a hold on the balance. I also began a long in Gold.  We are up 62% YTD and looking to exceed 400% total return on margin since inception by October 2018. 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.

5-20 – The third wave has gone marginally lower after seeing 1030. Now soy is ready to retrace into the 1022-1030 area before seeing the lower to 986. We should see the retest for wave 4 this week and then the last legg lower.

5-27 – Gap up last week on the news about the China Tariffs being put on hold. This news reaction will unwind and I am still expecting lower lows into the 990 area. From here I am interested in a long as this is the completion of a flat. We can retrace to the trend line but lower prices are expected.

6-3 – Still waiting on the setup for the long in Soy.  When I see 990 I start getting interested. Low window into mid June is where time and price should come together. Being patient and waiting on the setup.

 

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.

4-29 – 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

5-20 – Sugar has turned and is forming a flag channel. Resistance at 12.10 may cause the lower trend line to break and open the lower target at 10.50. If we break up above 12.10 we have a good chance of breaking out. The lower trend line must hold for higher prices to occur.

5-27 – Sugar has broken the flag that we have been discussing and that is a bullish sign. The retest of the broken trend line is key this week as we are in a retest and I am expecting to see support in the 11.80 area. I exited the second 1/3 size position at 12.50 this week and plan to enter a new position on the retest. I am leaving the trailer on for now. There is risk on the break of the lower channel trend line to 10.50

6-3 – 2/3s off and holding my trailer in Sugar. We rejected after a 5 up structure so likely we see a retrace into 12.10-12.30. I will be adding a new position and plan to carry my trailer higher into July.

 

Natural Gas – Entering the Trade

5-27 – Natural appears to be in a channel here and I am expecting resistance in the $3.00-3.05 area. Timing cycles are pointing lower and a retest of the current low is likely. I am expecting 2.40 by Mid July. I have entered Natural Gas 1/2 size short at 2.97 and plan to add the second 1/2 after a full reversal is signaled. There is still a chance to see a higher high here with neg D on RSI which would sweeten this setup. All entries for the weekly call are posted on our private twitter feed.

6-3 – I have taken 1/3 off in profit on the first decline at 2.897 as posted on our private twitter feed. I am looking to potentially add size if $3.00 is breached as a higher high is still possible.  I am planning the low into the cycle window of 7-14 and have another cycle low into August to consider.

 

 

Live Cattle – Entering the Trade

5-20 – Live Cattle is in the last legg lower into the 18 month cycle window. I am expecting a major turn and a big rally from that area. We have not yet broken Wave y which should occur this week. This will set up positive D on RSI which is what I want to see before choosing my entry. I had a similar trade when I started the Weekly Call in October of 2016, this turn should not disappoint.

5-27 – Patiently waiting on lower prices and the 18 month cycle low on Live Cattle. We are approaching the slaughter peak and seasonality should press prices lower. I am still expecting wave y to break and see a lower low into our cycle date.

6-3 – Live Cattle may retest this week and then move higher. The 18 month cycle window may already be in. The retest this week if it finds support at 100.20 will call price higher into the 7/7 window and $108. If the trend line demonstrates support, I plan to enter long.

 

 

Coffee – Entering the Trade

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.

5-20 – No change in forecast, seasonality points lower and I am still expecting 114s. We will likely get there after the current retest finishes into 120.

5-27 – The retest appears done and I am expecting lower prices into 114s. Commercial sentiment has not shifted yet and I am watching this with interest as we are approaching the Brazil harvest season.

6-3 – Coffee may be forming a flag here. I am still expecting lower prices after we finish the three up. I am expecting a low in the month of July. A short entry may present itself this week which I will be looking for.

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. 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.

5-20 – Finally a turn for a wave 4. We should see $600 before seeing the last legg higher and negative D set up on RSI. I am waiting patiently on the turn here as this has been a very trendy move. Neg D and a reversal pattern and I like lumber short.

5-27 – We have seen the completion of wave 4 here and have made the expected $600 target and then some. A reversal is expected and higher prices into 650 or so and early July to complete the pattern. Once complete, I am looking for a significant drop into 450 or so. I am expecting neg D to set up on RSI. I’ll be patient and wait on the entry short.

6-3 – Nothing new this week, same as last week, wave 4 is complete and looking for the last legg up to complete into 650 or so. I will be looking for a short entry when the setup presents itself.

 

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 may 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.

5-20 – Monthly pivot holding as expected and we are set up for a rally this week. I am expecting the upper trend line and roughly $83 next. A break of the channel signals and confirms that the X wave and turn are confirmed.

5-27 – So far the channel is holding and bulls must perform here as a break of last week’s low would cause a retest of the current low. The turn is not confirmed yet and I am waiting to see if we complete the first three up. Upon completion, I plan to enter on the retest.

6-3 – Bull have performed so the are still alive here. Three up into the next cycle date of 6-11 is expected.  The retest after that move is key to the rally and $78 needs to hold. I will be considering a long entry at that time.

Gold – Entering the Trade

6-3 – Gold is at an inflection point and DX is turning. I entered a long in Gold last week at 1302.1 and may add size this week if we see 1290. Right now I am small, 1/2 size on this setup and am looking for a high in the July time frame. No stop on this trade as I am managing risk with size.

 

 

 

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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 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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