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I added to my Coffee position at the open and was stopped out of the entire position during the day for a small gain.
Finished the day with a loss of some of yesterday’s Coffee profits.
Here are my comments on my open positions based on the day’s price action.
KC – Coffee
Trade: Long 2 contracts of September Coffee Average Entry Price: $1.3735
Average Exit Price: $1.38125
Trade Grade: 2.5/5
Daily Comment: Coffee continued its run higher during the overnight session before reversing strongly and finishing the day lower posting a candle with a long upper shadow.
Trade Comment: I tried something a little different on this trade. The hypothesis was that prices would not trade below the midpoint of yesterday’s break out candle if the break out was valid. This gave me the opportunity to move my Stop up to just below the midpoint of the bar locking in a profit on the original contract and add another contract at the open with a Stop below the March highs. The end result being that if prices only traded lower from the open and triggered both Stops the trade would finish break even.
With the initial surge in prices I moved my Stop on the pyramid position to break even and left my Stop on the original position below the midpoint of yesterday’s bar. The idea was very successful during the overnight session and I probably should have taken some profits on the experimental pyramid contract when I had the chance. I finished the trade with a small profit on the original contract and will continue to monitor Coffee to confirm whether today was just a shake out or a reversal.
Here are my comments on the opportunities I’m watching based on the day’s price action.
GC – Gold
Gold continued higher today and closed above the 61.8% retracement level. I’m looking to see prices above $1,280 to confirm the break.
SB – Sugar
Sugar closed slightly higher today trading both higher and lower and posting a doji.
NG – Natural Gas
Natural Gas was strongly higher today closing above the 61.8% retracement of the recent range. If prices can break above the 200 SMA with impulsiveness I may look at entering this market.
Was curious about the choice in target. Was this a distant fib extension? With long targets like this one, would you tend to widen the gap between price and stop as profits lock in and the break out takes hold . . . this way giving enough room to ride out medium-term pull-back swings for the occasional moon-shot target to get hit?
The target in this instance is the 61.8% retracement of the 2014 highs and the recent lows using a continuous chart.
I don't really use targets in the traditional sense in that they are not a point I would automatically take profits.
This particular trade setup for Coffee is looking to get in near the start of a major long term trend. The target in this sense is really the next major point of potential resistance in the long term trend. I might use a level like this to take profits and then re-enter when price breaks this level but its not really a profit target.
If I had a large enough account I wouldn't move the stop at all after the break out takes hold (except maybe bringing the stop to break even after the break is confirmed) for this trade setup. I would be looking to hold the position through any minor or major corrections and only exit the trade when there a signal that the trend may be changing (such as a 2-3% break below the 200 SMA).
A cherry-picked example of the this trade can be seen using Gold for the 2009 - 2012 period. Catching all of this trend would have involved riding out many corrections but the 200 SMA was never challenged.
Rolling forward to the next period from 2012 - 2015 you can see what happened after the 200 SMA was broken.
Unfortunately, trading with a smaller account you don't really have the luxury of riding out major corrections as easily so you need to find a way to try and ride out the smaller corrections and take profits before the major corrections and then look to get back into the trade once the correction is finished.
I try and use other means such as the 40 SMA or minor fib patterns that I can use to trail stops and exit before major corrections to the trend. Trying to find the balance between giving the trade room to ride out minor corrections without giving up too much of any profits made is never easy.
Here are my comments on the opportunities I’m watching based on the day’s price action.
KC – Coffee
Coffee was lower during the overnight session before bouncing higher to re-test the March higher. Prices were unable to close above this level to finish the week.
GC – Gold
Gold was slightly higher today after re-testing the 61.8% retracement level during the overnight session. Prices briefly traded above $1,280 but were unable to close above this level.
SB – Sugar
Sugar traded lower today but finished well off the lows posting a candle with a long lower shadow.
NG – Natural Gas
Natural Gas did not follow through today trading lower and re-testing the 61.8% retracement level.
- Stopped out of Sugar for a solid profit
- Entered a Long Trade in Coffee
- Stopped out of Oil for a loss
- Pyramid Coffee and stopped out of entire position for a small profit
Finished the week with a small loss after seeing some large gains at points with my Coffee position.
I’ll start the weekly update with comments on my positions traded this week since I have no open positions at the end of the week.
SB – Sugar
Sugar started the week mixed with prices strongly higher to start the day on Monday and then followed through to the downside to start the day on Tuesday. This price action was enough to shake me out of my position before prices turned around and continued higher to finish the week at new highs for the move.
QM – Mini Crude Oil
Oil continued its run higher on Monday and Tuesday to close above the psychological $50 and trigger my Stop. Prices finished the week on a negative note posting two bearish full bodied candles and closing back at the 61.8% retracement level.
KC – Coffee
Coffee followed through with the bullish price action on Monday providing a signal to enter a Long position. Prices broke out sharply on Wednesday and continued to start the day on Thursday before a large reversal that shook me out of my position. Prices continued lower to start Friday before turning around and negating some of the negative price action from the day before.
Next up I’ll have a look at the other markets that I have been watching recently.
GC – Gold
Gold continued higher this week surpassing the 61.8% retracement of the range at $1,263. I’m looking for a close above $1,280 for confirmation the uptrend has resumed.
ZC – New Crop Corn
Corn rallied strong early the week up to $4.30 level. Prices were extremely volatile on Friday after the release of the supply and demand report and finished well off the highs. This price action may represent a change of trend.
CT – December Cotton
Cotton surged higher on Monday and Tuesday before prices paused at the 161.8% extension of the minor range and traded lower to finish the week.
ZW – New Crop Wheat
Wheat was also strongly higher to start the week surpassing the April highs but reacted negatively to the supply and demand report on Friday posting a bearish candle that wiped out most of the gains for the week.
NG - Natural Gas
Natural Gas surged higher on Thursday after a bullish storage report exceeding the 61.8% retracement mark of the recent range and closing towards the 200 SMA. I’m looking for prices to surpass the 200 SMA and close above $2.70 to confirm a bullish break.
Hogs didn’t follow through after the extremely bullish price action last week and finished the week practically unchanged. A re-test of the boundary line at 84 might offer a good opportunity to get Long.
ZS – New Crop Soybeans
Soybeans continued to surge higher this week posting new highs for the move and closing in on the 261.8% extension level.
DX – US Dollar Index
The US Dollar traded down to the 61.8% retracement level early in the week and bounced from this level to finish the week back near the falling short term moving averages.
6E - Euro
The Euro attempted to surpass the 61.8% retracement of the recent range early in the week but quickly failed this level posting two bearish candles to finish the week.
ZN - 10 Year Note
The Notes broke higher on Friday closing above the April high and implying that the next target may be the 161.8% extension at 135 13/32.
I re-established my Long Gold and Coffee positions today.
Solid profits today particularly in Coffee.
Here are my comments on my open positions based on the day’s price action.
QO – Mini Gold
Trade: Long 1 contract of Jun Mini Gold
Entry Price: $1,281.50
Risk: stop moved to $1,258.50 risking $1,150
Target: Short Term - $1,369, Long Term - $1,600
Reasons for entering the trade:
Technical: Prices surpassed the 61.8% retracement suggesting the uptrend will continue.
Fundamental Factors: Global monetary policy appear to be driving the Gold market higher.
Daily Comment: Gold continued higher today closing above $1,280 and posting a bullish full bodied candle.
KC – Coffee
Trade: Long 1 contracts of September Coffee
Entry Price: $1.3510
Risk: Stop $1.3360 risking $610
Target: Short Term - $1.51, Long Term - 1.97
Reasons for entering the trade:
Technical: Prices surpassed the 200 SMA (3rd attempt) and the 61.8% retracement of the recent range with two bullish full bodied candles.
Fundamental: Weather is causing harvest issues in Brazil as well as suspected quality issues with the new crop.
Daily Comment: Coffee was lower during the day trading back down to Friday’s low and providing an opportunity to re-establish my position. Prices recovered to finish the day practically unchanged and post a candle with a long lower shadow.
Here are my comments on the opportunities I’m watching based on the day’s price action.
SB – Sugar
Sugar closed lower today posting another indecisive candle and suggesting the recent rally may be taking a breather.
NG – Natural Gas
Natural Gas rallied towards the 200 SMA today but could not hold onto the gains finishing the day only slightly higher and posting a candle with an upper shadow.
CL – Crude Oil
Oil continued lower today closing back below the 61.8% retracement level and the short term moving averages.
