How was your weekend? I hope that everyone had a great and relaxing weekend. On my side here, all is well and good. It would be even better if we can trade profitably next week, right? :)
Alright lets proceed with the weekend updates.
The US market closed down again on Friday. the G8 meeting has been concluded and we will see how the futures open in the pre-market on Sunday evening (Monday morning for Malaysian time).
So lets proceed to the weekly updates.
S&P 500 Futures - ES
We traded to these following levels last week:
Opened: 1346
High: 1351
Low: 1289.75
Close: 1290.50
Our levels for last week was:
The possible upper weekly range is: 1385
The possible lower weekly range is: 1328 and an outside chance to 1309 if we break further.
Looks like the week was more bearish than most's expectation. We broke through a few levels of support and even closed below the 50ema in the weekly chart. A few weeks ago before we broke down, we noted that the general trend would be assumed to be up as long as we are still trading above the 20ema in the weekly chart. Now, we are firmly trading below the 20ema in the weekly.
We opened the year at 1274.75. We are now at 1290.50, which means we almost gave back most of the gains for the whole of 2012 in just 3 weeks, which I feel is a bit fast. But that is the nature of the market. It takes longer to go up and just a short period to come down.
So all eyes will be on Europe from now. We also mention that mid year tends to be bearish in the market. There is an old saying in the market 'sell in May and go away' so you just want to be aware of that. As with all things trading, sometimes it works and sometimes it doesn't. But what it does tell you is that traditionally, people are more bearish in midyear most of the time.
From 1275 area down to 1200 are large consolidation areas from Oct-Dec of last year and after that, we have another consolidation area from 1200 down to 1100. If there are no major negative catalyst to sink this market, and should price still want to go down further, I think it will be in a grinding fashion. But if a real big negative news comes in, then we might blow past this area in a cleaner fashion. So we will be on the lookout for whats coming up on the horizon in the coming days.
Next week, I would want to see if the 50ema is holding or not. Price could recover a bit before resuming the down trend again. Price just can't continue to go down like a rock especially if there are no major catalyst. A bounce back before resuming down is a healthy move. So I'm looking for the mid 1250s to hold for next week. But should a really bad news comes in, then we might go down all the way to test 1220 area.
Here are the levels for next week:
Possible Weekly Upper Range: 1343
Possible Weekly Lower Range: 1250 and an outer chance to reach 1220.
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Lets move on to the grains products:
Soybean Oil
We traded to these following levels last week:
Opened: 52.38
High: 52.43
Low: 50.03
Closed: 50.24
Our levels for last week was:
The possible upper weekly range is: 55
The possible lower weekly range is: 51 and an outside chance to touch 50.30 if we break further.
Soybean Oil had broke down further and closed outside of the triangle pattern. However, the support levels are still holding and there are a few immediate support levels below too. The low of the week was 50.03 which was quite close to our weekly lower range projection.
Its interesting to see how we will do next week. We had a good bounce in the Wheat and Corn contracts and Soybean had temporarily halted its downward decline as well. This should give Soybean Oil somewhat of an upward pull or at least, stop it from dropping as much.
However, Corn and Wheat are basically trading in a consolidation pattern so there is a possibility that they chop back down again too. If they should chop back down, we may see some acceleration in downside move in Soybean Oil again. We will let price action unfolds and we will follow accordingly.
Possible upper weekly range is: 52
Possible lower weekly range is: 48.30
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Soybean
We traded to these following levels last week:
Opened: 1406
High: 1449.75
Low: 1376
Closed: 1408.25
Our levels for last week was:
The possible upper weekly range: 1465
The possible lower weekly range: 1350
We closed the week as a doji. Thanks to the rally in Wheat and Corn, Soybean was able to halt its decline as well. The low of the week actually was right on the trend line we drew on the chart.
The support level held nicely and it would be interesting to see if prices can hold here and we go back up to test the highs again. If we are able to do this, then I think Soybean will be able to push the price up for the grains commodities including out FCPO.
Since we close the week as a doji, it is possible that we might trade sideways for a while before price breaks out of either direction. Even though we have a strong performance in the Corn and Wheat, those two contracts are trading in a consolidation pattern and there was no clean break out there yet plus there are some resistance overhead.
So I am in favor of a sideways trading for a few days before we see a definite trend developing. Our FCPO has been bleeding badly since Soybean broke its upward channel so if a recovery in the Soybean plus a stronger performance in the other grains, we might see some bounce in our FCPO too.
We will follow the price action of this contract closely.
The possible upper weekly range is: 1465
The possible lower weekly range is: 1350
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Wheat
We traded to these following levels:
Opened: 599
High: 697.50
Low: 592.25
Closed: 695
Our levels for last week was:
The possible upper weekly range: 655
The possible lower weekly range: 576
Wow.. look at that big green weekly bar! We blew past our weekly projected range by more than 40 points! What a big rally that was. And to be honest, it was a good relief as this rally in Wheat and Corn also halted the strong down move in our FCPO. The bottom of the flag (thin blue line) held nicely as support for two weeks in a row.
Now the question I have in my mind is, how far can we push up like this? Seems to me that there are quite a few resistance ahead. The first obstacle is the upper triangle trend line and of we manage to break that and close above it, there will still be more resistance overhead.
So we will see if price will maintain this upward momentum next week.
The possible upper weekly range is: 754
The possible lower weekly range is: 622
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Corn
We traded to these following levels last week:
Opened: 582
High: 638.50
Low: 576.25
Closed: 633.25
Our levels for last week was:
The possible upper weekly range: 616
The possible lower weekly range: 640
Corn also had a strong week. However, how far this recent move up can sustain is whole different matter. Just like Wheat, there will be a few overhead resistance to overcome. Overall, this contract is trading in a consolidation area.
But the strong performance in this contract actually help to slow down the decline in all the grains product including our FCPO this week. Perhaps if Corn is able to continue this strong move, then we might be able to recover a bit in our FCPO.
The lower triangle will be a major resistance to overcome and of we manage to break that, then we will see if we can break the 665 area for Corn. But because we are trading within the consolidation area, I wouldn't discount the possibility that we might chop back down again next week despite the strong gains this week.
We will let price lead us.
Here are the levels for next week:
Possible upper weekly range: 665
Possible lower weekly range: 575
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I will update the weekly range for FKLI and FCPO tomorrow.
Ciao and good night all!
Best Wishes,
Tech Trader
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