Wow looks like we have an interesting week ahead!
We will start off by looking at the important economic data that are being released for this coming week that might effect the market.
First off, we have ISM Manufacturing PMI on Monday, FOMC Meeting Minutes on Tuesday, ADP Non-Farm Employment Change and ISM Non-Manufacturing PMI on Wednesday, nothing of importance on Thursday, Non-Farm Employment Change and Unemployment Rate on Friday.
Looks like we are going to have quite a choppy week ahead. Now lets look at what we can deduce from the weekly charts.
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Lets start off with the S&P 500 contracts. Now for those of you new to the site and are asking why are we using the S&P contracts and not the Dow or the Nasdaq or other indices, you can refer to my previous post last week for the reason by clicking here. It is all basically the same as the patterns look almost the same on all of these index charts and I have all of them up at the same time on my platform at all times
Ok here is the chart for the S&P 500 contract.
Last week, we had an up week and made a new high of 1419.75 before pulling back to test the lower channel and 20ema line at 1386.25. From the charts, the uptrend looks like it is still in tact and we should continue to trade accordingly until the trend has been broken conclusively.
The Upper Resistance area is at 1430 and if we manage to break that, we may test the 1440 area.
The Lower Support area is at 1393 and 1380. If we close below 1380 for the week, we have to be careful of a possible trend change.
Do not discount the possibility that we might trade outside of these ranges if some big news, good or bad, hit the wires and I will keep a close eye on the market and update here if such changes occur. For now, we will plan our trades accordingly.
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Next we look at the 4 CME Grains that we are tracking. Take note that we will have a few economic data for Agricultural product this week which are Crop Progress on Monday, US Export Sales on Thursday and World Agricultural Supply and Demands Estimates on Sunday.
Soybean Oil Futures
What a volatile week for the Soybean Oil Contract. We started the week very well and making a high of 55.82, which was near our minor trend line of 56. Then we pulled back sharply as prices were being drag down by the performance of the other grains product such as Corn and Wheat and broke through our minor trend line and traded to a low of 53.60. I have drawn two blue minor trend line across the recent price action and it seems like we are forming a broadening wedge pattern within the big triangle. On Friday cash hours trading, bullish USDA report caused priced of all the grains to gap up to regains most of the losses of the pullback of the previous few days. In the end, we close the week as a Doji Candle.
What to expect:
I think looking at where we are trading now, which is within the shaded rectangle on the left which is a consolidation area in the beginning of 2011, I think we are now entering into a choppy phase of the chart. This was confirmed with the closing of the last weekly bar as a Doji, which means that the buyers and sellers are relatively balanced out. Within the broadening wedge pattern, we can trade from all kinds of pattern from a small bar which means further indecision of the market to big large trend bars. We will let the price unfolds and see how it will effect our FCPO accordingly.
The Upper Weekly Range for the Soybean Oil contract is at 56.20
The Lower Weekly Range stands at 53.25.
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Soybean Futures
Ok next we look at Soybean Futures. This contract performed the best out of all the grains product that we are tracking. We traded up on Monday and by Thursday, the price of Soybean Futures were being dragged down also by the other grains product as we have updated in our daily market commentary. However, bullish USDA report caused the price of this contract to gap up big on the cash hours trading on Friday and we closed the week with a nice healthy up trend bar. I have drawn another minor trend line across the low of the last three week as we have broken through the lower channel line twice. It remains to be seen what would happen next week as we are now also trading inside the consolidation of the beginning of 2011 as I have highlighted in rectangle on the left side.
But there is no doubt that this contract shows a more healthy upside biased chart compared with all the other 3 grains that we are tracking.
The Weekly Upper Range stands at 1429 and if there is enough strength, maybe an outside chance of testing 1453.
The Weekly Lower Range stands at 1364 and 1355.
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Wheat Futures
Well well well.. The consolidation continues for the Wheat Futures. We actually broke out of the smaller triangle lower trend line at 635 and went down to test near the larger triangle bottom trend line at 611. Along with the bullish USDA report on Friday, we gaped up during cash hours trading to close the week in positive territory. However, the weekly bar closed as a Rickshaw Man Candle which signifies indecision in the market.
For a Rickshaw man candle pattern, it is believed that an upside break out of the candle is a bullish pattern while a downside breakout is a bearish pattern. Based on this theory, I think there is a better chance of us breaking up on the upside because the large triangle lower trend line is a major support area at around 608.
An upside breakout of the Rickshaw man candle would meet resistance at the smaller triangle/flag pattern upper trend line at 673.50. It remains to be seen if we can break out of this smaller triangle pattern on the upside. If we finally do, we may go up to test the 700 level in the coming days. The break below 635 last week would have caught many new bears and they will be looking to get out from their position and when they do, price would be push up as an effect and at the same time, new bears would be less reluctant to sell now after being caught once and would wait for more bearish confirmation before trying to sell again. I'm looking for Wheat to be in a choppy range within the smaller triangle to a slightly upside strength to test the resistance range of 673.5
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Corn Futures
Ok lastly we will look at the Corn Futures. Corn was one of the bearish contract last week. We broke through both the minor and major trend line at 640 and 625 to make a low of 603! Talk about bearish!
What was more interesting was, after the USDA report, we gained close to 40 points from the lows on Friday alone! Talk about volatility! So now we have closed back into the triangle pattern but formed another Rickshaw Man Candle pattern which signifies indecision. We will wait for more price action to unfold for more clarity in the coming days on the daily chart.
I am looking at a lower weekly range of 630 and an upper range of 664 and if we break that, may test the 675 range.
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Ok that's about it for the possible weekly range. Remember that we can only read what the chart tells us and in trading, there is no 100% guarantee that prices would react like we have predicted which is why it is important for us to review the daily price action and apply the right trading strategies accordingly.
I wish everyone a great weekend ahead and trade safe!
Best Wishes,
Tech Trader
p/s: I have to go out to airport shortly.. so will return to correct the typo mistakes later.. Ciao and have a great weekend all!
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