Mike Seery is back this week to give our readers a weekly recap of the Futures market. He has been Senior Analyst for close to 15 years and has extensive knowledge of all of the commodity and option markets.
Crude oil futures in the June contract are trading above their 20 and 100 day moving average as I’ve talked about in many previous blogs I’m sitting on the sidelines in this market but I do think prices have topped out around $62 which seems to be major resistance as prices settled last Friday at 59.37 while currently trading at 59.70 up slightly for the trading week. If you are currently long this market I would place my stop loss below the 10 day low which currently stands around 58.40 as Saudi Arabia this week stated that prices will never get to $100 again and actually said in the next decade prices could stay below $40 as the world is awash with crude oil at the current time. The U.S dollar hit a 4 month low this week and that has pushed up oil prices and many of the commodity prices as the CRB index hit a five month high as well but I do think this rally as long in the tooth as lower prices are ahead but I’m still sitting on the sidelines waiting for better chart structure to develop.
Chart Structure: Improving
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Gold futures in the June contract are trading above their 20 and 100 day moving average looking to breakout after a 7 week consolidation after settling in New York last Friday at 1,189 currently trading at 1,220 rallying about $30 over the last week as the U.S dollar hit a 4 month low pushing up the precious metals and many commodity prices in general. I am currently sitting on the sidelines in this market as I’m waiting for better chart structure as the 10 day low needs to be raised before we enter, however we could be looking at possibly getting into a bullish position sometime next week as I’m certainly not recommending any type of short position as that’s countertrend at the current time.
The 10 day low is over $40 away so before entering this trade I would like to see the stop loss around $25 away which could happen in week’s trade as the risk factor is my number one formula before entering into a trade so sit on the sidelines and wait for 1,225 to be broken with solid chart structure as my last two recommendations were both to the downside & both were small losers. As a trader you must have thick skin and have to forget about past winners and losers and stay with your trading system and my trading system is a trend following system as I will enter this trade on the upside without blinking twice if the trade meets criteria.
Chart structure: Poor
Silver futures in the July contract are trading higher for the 4th consecutive trading session after settling last Friday in New York at 16.47 an ounce up over $1 for the trading week hitting an 11 week high, however the chart structure is extremely poor at the current time so I’m sitting on the sidelines but I’m certainly not recommending any short positions as the trend clearly is to the upside due to the U.S dollar which is down around 800 points over the last 2 months supporting prices here in the short term. Silver futures are trading above their 20 and 100 day moving average telling you that the trend is to the upside, however the 10 day low it’s too far away to meet criteria so keep an eye on this market and take advantage of any price dips as silver certainly looks to be moving higher in my opinion.
Silver prices continued to flirt with the 15.50 level and was unable to break so now prices are looking at the critical 17.50 level as major resistance and then 18.45 as conditions are overbought at the current time so look for profit taking to ensue before entering a bullish position in my opinion. Volatility in silver has increased in the last several days as silver historically speaking is one of the most volatile commodities on a daily basis so make sure you place the proper amount of contracts risking 2% of your account balance on any given trade as the last two recommendations in silver were to the downside and both were small losses.
Chart Structure: Poor
Coffee futures in the July contract settled last Friday at 134.65 while currently trading at 138 as I’ve been recommending a short position when prices broke the 135 level and if you took the original trade continue to place your stop at 138.30 on a closing basis as we could be stopped out possibly in today’s trade. The volatility in coffee is extremely low at the current time with outstanding chart structure but if you are stopped out move on and look at other markets that are beginning to trend as I’m very surprised to see this little volatility in such a highly volatile commodity.
Coffee prices have stalled out around the 130 level over the last several months as I would have to think that volatility will start to increase as we’re hanging in there by the skin of our teeth and if you did not take this trade look at other markets as well as it looks like this trend is starting to fizzle out in my opinion.
When you trade the commodity markets you must accept many small losses and that’s what occurring to me over the last several weeks as the loss will be around $1,200 but percentage wise was very small and that’s what I always try to stipulate that you must make sure that you risk 2% maximum on any given trade because you will have more losers than winners over the course of time in my opinion as the object is to let your winners run and cut your losses.
Chart Structure: Excellent
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