Aug 15, 2014: 11:20 AM CST
Even if we don’t trade commodities, it’s helpful to learn educational lessons and plan trades as they develop from interesting patterns.
Corn is forming a great potential Reversal Example, but we need to monitor it in real time to determine whether this time will be different, or whether we’ll just see a repeat pattern of the similar failed trend reversal signal from June 2014.
Here’s the current Reversal Pattern and the prior failed pattern in a strong downtrend:
I’m showing the Teucrium Commodity Trust Corn Fund – an ETF – but you could also trade or monitor the actual corn futures contract (@C).
Let’s focus on two prior “Rounded Reversal with Divergence” patterns before discussing the current situation.
Rounded Reversal #1 (Success)
From April to May of 2014, Corn shares formed what I like to call a “Rounded Reversal with Divergences” pattern into the $35.50 per share (ETF) level.
Note the red line showing divergences in the Momentum Oscillator as price formed an ‘arc’ pattern or Rounded Reversal Dome.
Price triggered a liquidate/sell-short signal on the break beneath the rising 50 day EMA at the $34.00 per share level and a reversal was confirmed with sharp downside price action. Continue Reading…
Aug 15, 2014: 11:00 AM CST
The Dow Jones faces a major decision point into a known resistance cluster – monitor what happens here closely.
Let’s take a quick look at the key level and plan accordingly:
The 20/50 EMA cluster overlaps the 16,750 area in the Dow Jones Industrial Index.
Contrast this with the breakout yesterday in the S&P 500 as I highlighted in the update “S&P 500 Breaks on Through to the Other Side.”
There’s a bit of disconnect – at least on the price chart – between the breakout for the S&P 500 (which could morph into a failed breakout or bull trap) and the reversal candle today that is developing into this cluster in the Dow Jones.
For now, we’ll note a downside retracment pathway for price back to the 16,400 area IF price continues to move down away from the resistance cluster.
Alternately, we’ll note a Bullish Breakout Pathway – similar to the S&P 500 – should buyers push the index back above the 16,800 level and into the clear “Open Air Pocket.” If so, 17,100 and beyond (similar to 1,990/2,000 in the S&P 500) would become the tradable target. Continue Reading…
Aug 14, 2014: 2:37 PM CST
I’m both pleased and humbled to announce an all-day event of 19 educational webinars from top speakers discussing their favorite trade set-ups as a unique fundraiser to assist one of our own colleagues who has been very influential in the trading community.
Please join us and learn favorite set-ups from top trading educators while at the same time assisting the family of Toni Hansen as she journeys on her road to recovery from a very serious medical condition.
Full details are available through the Information and Registration Page at Tasty Trade.com:
This is not an affiliate event and donations will go to Toni and her family.
I am truly honored to be included in the Speaker Line-up and strongly encourage you to attend all of the information-packed sessions that will take place all day this Saturday.
On a personal note, Toni was one of the first educators I met when I began attending the Traders Expos in 2005 and quickly became a colleague and close friend as I transitioned to a speaker at the Traders Expo.
I sought her advice for the first time I presented at the Expo in 2009 and she was very kind to share her wisdom.
I have always respected her simple style of explaining the complexities of trading strategies and have seen her reputation grow in the trading community.
Our thoughts and prayers go out to her and her family during her recovery period and we are eager to assist in any way possible to make the difficult journey to recovery a little bit easier.
My thanks also go out to Jeanette Sims and everyone who helped create this event and the fellow colleagues who will be speaking this Saturday.
Please join us for a full day of education and support for one of the most generous leaders in the field of trader education.
Aug 14, 2014: 2:13 PM CST
We have another Trend Day on our hands as price once again gaps higher and (so far) continues in the direction of the upward movement.
First, start with this morning’s planning post and then compare that with the bullish trend day suggested by the morning update.
We’ll start with the intraday update of the S&P 500:
Like yesterday, we saw a strong opening bullish impulse that created a trend day into the close.
We look to trade retracements or pullbacks along the way and DO NOT try to call a top in a trending market.
Again, reference why the break above 1,945 was significant, as detailed in this morning’s update.
Aug 14, 2014: 11:22 AM CST
Not to be spooked by a little retracement in the market, the buyers (bulls) decided to break price higher to the “other side” of the 20/50 EMA resistance.
Let’s update our chart and note the “Open Air” as price completes another repeat pattern:
First, take a moment to study my prior update from August 11 entitled “Planning a S&P 500 Breakout from a Repeat Pattern.”
I highlighted two similar retracements under the rising 50 day EMA (February and April) and then showed what happened next when price traded up into the resistance – and then beyond it.
It’s very possible we’re seeing the same thing happen in August.
In other words, price is breaking through the 20/50 EMA reference level (1,945) and could complete a run toward the prior high just shy of 2,000.
If so, the movement would be fueled by bears (short-sellers) buying-back to cover stop-losses as buyers continue to flood money into the market (breakout buy orders above 1,950 and beyond).
We’ll monitor the “Open Air” closely and be on guard for any failure outcome (a reversal back under 1,945). Continue Reading…