I was as giddy as a little school girl today as December Coffee futures tagged a long term key level area of 101 and buyers came in fast and furious. 

Coffee had already tested and pulled above. Today was another test resulting in a reversal daily hammer candle. If we run the Fibonacci levels from the high of 192 two years ago, the first major level (23%) lines up perfectly with what is visual horizontal resistance at $121.30. The daily MACD is drifting up and the RSI is coming off of extreme oversold levels. 

Trade Idea:

Long December Coffee 

Target Profit $121.29

Stop Loss $101

Move SL to Break Even once price reaches $106.6

Adding to the technical setup, turmoil in South America is ramping up even further. Argentina’s currency crisis deepened on Thursday as an emergency interest-rate increase to 60 percent failed to stop jittery investors from pulling their money out of the country. Brazil has now deployed armed forces to its borders in an effort to keep refugees from flowing into the country as a result of inflationary economic conditions. 

The region runs the risk of increased strain and adds to risk of future crop production supply adding to the bullish case for coffee. This and the very clear technical setup has Wags doing a little dance in excitement. 

Happy trading. 

-Wags. 

 

Like all metals the last few months, Silver has also felt pain. Weekly RSI is in oversold territory but did end with a a reversal doji. The daily also had a bullish engulfing Friday. Further consolidation up is likely to the 15.3 level especially if the dollar continues weakening. 

Copper and anything else paired to the Dollar felt more pain today as the USD spiked to its highest level in over 15 months. But I believe the dollar bull market and Metal’s bear market are both in their ninth inning. 

Looking at the daily of Copper we had yet a lower close but looking back over the past two months, there are signs of hope for Copper bulls. Each recent major lower lower is met with a higher RSI. Bullish RSI divergence. Stochastics are oversold and although the MACD is still negative the peak to trough is much lower that the first higher low. 

Conversely, the $DXY which charts the Greenback has a very clear higher high today but the RSI is not confirming. 

What’s the game plan? Long for a swing trade up the the 38% Fib Retracement coming in at 2.9187. That is unless the rough looking double bottom (including a daily wick) holds. 

Copper is one of the base metals the modern world cannot do without. That’s me not going into all the personal electronics and electric cars combined with a supply glut looming. So why not like the red metal down here with a decent trade setup. 

Turkey and its troubles threw a little Risk Off in the market Friday but the downside was contained. The S&P Futures tagged the 21day MA and reversed course to end the week only sightly down. 

 

 

 

 

 

 

 

 

Inflation has been creeping up but still not enough to ring any alarm bells. Longer term view still remains bullish and a test of January all time highs are in the cards and not far away.  

WTI Crude broke the wedge mentioned last week to the downside and is now below the 8&21 MAs. Friday saw some consolidation to the upside but so long as contained by those MAs the bias is to the downside. The next major support lies at the 200day which is lining up with a horizontal level at 64.50.  

Copper was close to breaking out when pushed through key levels and moving averages but gradually pulled back as the Risk Off sentiment took over the market. The 2.70 level has provided support so the question will be if it does this time. The daily MACD has been creeping up but until a positive close the bias remains sell the rips with long attempts around the 2.7 area. 

And the big winning trade of the week was Wheat. Along with other Ag commodities having extreme moves over the past months due to Tariffs, Wheat has been a beast. Until this week. Wheat was pressing channel resistance when we alerted a Trade Alert to sell. It took the week for the trade to pay out but it did nicely Friday with wheat down 3.2% on the day. With a MACD slowing and clear bearish RSI divergence, sell the rips is the course of action next week until the 21day MA is tagged and then reassess. It could pause and consolidate a little there but until proven otherwise, a test of channel support wouldn’t be a bad thing. 

 

Nearing the later months of Summer, can’t believe I have to say that, big earnings out of the way and the Fed holding rates, I believe we’re in for a grind higher. Unless we take out January the possibility to stay range bound with support of 2800 is pretty good. 

The VIX is giving clues to this as has been forming a falling triangle (they break to the downside more than to the upside) ever since the big spike in Feb. 

On to Crude, bias still remains to the downside towards 64.50 area unless it can get above the 69.60 level.

Its early but Copper is starting to show signs of a stronger bottom. MACD is close to ticking positive. Just keep on eye on daily closings above the 8&21days for confirmation. 

Although I don’t anticipate a whole lot of decisive moves the holiday week there are some interesting setups to keep a watch on. The indexes are looking like a deeper pullback is in the cards. Let’s look at the E Minis first. Currently ES is back within a 2703 to 2740 area it was in for about two week.

If we stay here throughout this holiday week we could be setting up for what looks like a head and shoulders pattern with a slope of 2703.

The NQ  doesn’t have as clear of a pattern but as of now the daily is below the 8 & 21 day MAs and the MACD has ticked negative so bias is still to the downside with a big support of 7000. 

Small Caps broke a Rising Wedge and as usual the pullback so far has been quick and deep. Currently below the 8 & 21 day MAs with a negative tick so again bias is to the downside with a big support of 1618. 

Looking across the Pacific the Nikkei futures appear to be setting up a double top with similar indicators as prior noted indexes with support of 21900 – 21980 area. 

Given all these indexes have a downside bias only adds another downside bias to them all. 

Moving on to energy, WTI oil had a huge week. After OPEC’s big meeting a week ago with promises to increase production the market realized it had been pricing in a bigger, faster production increase and the market reprised in a hurry. Yesterday Trump announced a side deal with Saudi Arabia to increase production by 2 Million barrels a day although the deal is likely to anger Iran and Venezuela. Looking at the weekly, CL is testing a long term channel resistance in place since its lows. 

The weekly RSI slope is downward so each swing high is being met with less strength of so I would not be surprised to see CL pullback from this resistance level. 

The Metals have all been pretty beaten down on trade war concerns and the USD at recent highs. So much so that many as looking like attractive longs for a bounce or more (except Silver).

As I said, the DXY has been flirting with highs of $95 but a big reversal Friday and USD is looking like $94 will not hold putting 92.50 area in play. 

 

If the USD keeps pulling back this is a bullish catalyst for metals so lets look at some interesting options. 

The big news this week about Gold is the Death Cross that occurred (the 50 MA crossing below the 200). The trend is to the downside and not yet oversold but Gold is coming up to a longer term trend support on the weekly so could be near bounce levels. 

The big level many Copper traders have been eying is 2.95. Given Copper has been especially hurt with trade war fears given China consumes about 40% of the metal for industrial use any hint of a resolution would be a very welcome news to Copper longs. Given almost at oversold levels and near a bug support area keep you eyes on a long signal. 

Platinum has been on a steady downtrend for some time but actually has some bullish RSI divergence. Having respected channel support Friday Platinum actually looks like it may have found a longer term trade bottom than other Metals. 

Finally Silver. Unlike the other Metals Silver looks in danger of a deeper correction if cannot regain some bullish momentum quick it has broken pennant support. It should be noted that Silver did break to the upside of the pennant and quickly reversed so it hasn’t exactly holding true to patterns lately and why I’m staying clear of at the moment given other Metals have clearer setups. 

Given the shortened trading week keep an eye on the setups and don’t be in a hurry as trading will likely be choppy on low volume. Happy trading and Independence day.

-Wags

We’ve seen selling pressure come in in recent days and after breaking trend support the question is where do we go from here especially with a holiday week coming up meaning traditionally low volume and choppiness. 

Here’s one scenario that “could” play out. Before the recent highs we were caught in a sideways range for about two weeks from roughly 2703-2733. ES then popped up so close to 2800. Now ES is back at the lower end of that previous range with some shorter time frame oversold levels to be worked out with some consolidation. With the coming holiday week, one scenario to be mindful of is the development with a head and shoulders pattern with a slope of 2703. 

We’ll see if we chop around this previous range for a week or so like before and see what happens but is that support level gives, I wouldn’t be buying dips until about 2600 area. 

After retracing all and more of a huge weekly gain Copper is looking interesting from a longer term trade standpoint. Looking at the daily Copper is testing trend support and in a support zone which has found buyers in the past. 

Zooming in on the 15min we can see the makings of a falling wedge that is just now breaking to the upside. A trade long at these levels with a stop below the support zone offers decent upside given the selloff is in part over exaggerated from the China tariff threats which, if anyone knows Trump’s negotiating style, is a bluff. China consumes roughly 40% of Copper for manufacturing so given the support zone and fears baked into the price, any rumors or news tariffs won’t materialize should aid in a quick short squeeze to the upside for the metal. 

After today’s move up CL_F should find resistance in the 65.89 to 66 area (the bottom of the cloud and horizontal resistance). So long as this area holds, we still view the move today as consolidation off of oversold levels and a back test of the broken bear flag with a continuation to a target of $62 area. The measured move of the larger Rising Wedge from the $72 levels. 

Gold is at an interesting intersection. Near longer term daily support trend line at backtest of broken trend resistance, a long with a stop loss just below trend support at 1277 or 1276 could offer a decent risk reward trade especially given the general markets are at frothy levels at the moment. Target to look for are a test of the bottom of the underside of consolidation at 1295, top of at 1307 and then 1322.