Commodities – Page 118 – Slope of Hope with Tim Knight

Slope of Hope Blog Posts

Slope initially began as a blog, so this is where most of the website’s content resides. Here we have tens of thousands of posts dating back over a decade. These are listed in reverse chronological order. Click on any category icon below to see posts tagged with that particular subject, or click on a word in the category cloud on the right side of the screen for more specific choices.

Bang For Your Buck: Dollarized ATR (by Trade Flight Plan)

By Trade Flight Plan - 16 years ago (06, Apr 2010 6:03:34 AM)

With the S&P 500 and major equity indexes doing nothing more than
continuing their slow grind higher, futures traders are enjoying nice
intraday ranges and weekly swing trades on a variety of currency and
commodity instruments while ES traders are lucky to see 10 handles (40
ticks) in a day.

So on days the ES is slow, what futures instruments provide
volatility and trading range opportunities? We analyzed some of the
more popular futures contracts favored by traders based on their average
20-day volumes. We ignored futures contracts that did not trade at
least 1,000 contracts consistently for the past 20 days.

To approximate intraday volatility potential, we take a look at a 20-day moving average
for daily average true range (ATR). Since not all futures
contracts are created equal, we then "dollarize" the ATR of each futures
contract based on tick size and tick dollar value.

For example, the British Pound (6B) is known to be a volatile futures
contract with nice ranges – a daily average range of 166 pips!
However, the Euro futures contracts (6E) offers larger dollarized
intraday ranges since each 6E pip has a dollar value ($12.50) that's twice as
much as 6B (only $6.25).

We highlight some of the most popular futures contracts to see how
they stack up against others. The results are interesting, with some
instruments moving more in a day than ES moves in a week. Since there's
no point in trading any instrument that lacks sufficient volume and
liquidity, click here to launch a view sorted by average daily contract volume.

DISCLAIMER
To be clear, this is NOT a recommendation or endorsement to trade any
futures instruments. Click here to read our full disclaimer.
It is simply a study in dollarized daily ranges. It is critical to
grasp several points:

Larger dollarized ranges involve greater risk.
Different futures contracts CANNOT necessarily be traded using the
same setups and techniques as ES.
Futures can neglect all kinds of perceived technical levels.
Futures can cause inexperienced traders to lose more capital than
they realize is at risk.
Different futures instruments trade during different market sessions
and can behave completely differently during various times throughout a
24-hour trading day.
Futures contracts can suffer stop runs and unacceptably wide bid/ask
spreads, especially those with less liquid trading volumes.
Past performance and any statistics are no guarantee of future
results.
Any trades without proper risk management will eventually cause
harm.

Commodity Play (by Fujisan)

By Fujisan - 16 years ago (04, Apr 2010 6:58:29 AM)

While the general market has been going through the consolidation phase, I am seeing many metals and commodity stocks breaking up this week, and one of the good examples is the copper.

When I saw the copper breaking out, I went long other metals and miners expecting the similar price action. Copper is also known to be a good economic indicator. This pattern is very similar to AMZN breakout.

Copper Daily

AMZN Weekly (for comp purpose)

FCX Daily

Silver Daily

Silver closed above the previous high on Thursday. No volume confirmation due to the pre-holiday trading. Need a follow through on Monday for a=c pattern confirmation.

Crude Oil Daily

Crude oil closed above the previous high on Thursday. No volume confirmation due to the pre-holiday trading. Need a follow through on Monday for a=c pattern confirmation (needless to say, it needs to clear the trendline first).

GDX Daily = Possible Gartley pattern formation

Although GDX is going through a lousy consolidation, GDX is possibly forming a bearish Gartley pattern. Waiting for the confirmation to close above the previous swing high.

Gold Daily

Gold is going through the consolidation with a possible IH&S pattern (it's not clean). Waiting for the confirmation to close above the previous swing high for a=c pattern.

FXI Daily

EEM Daily

EUR/USD Daily

EUR/USD did not follow through to the downside and came back up to the "rectangular pattern" trading range. I came up with two different scenarios for this pair – Gartley or IH&S patterns.

This pair is going to be the key for the commodity play next week. If the Fed decided to increase the discount rate and the EUR/USD pair resumes to the downside, then, all of the above charts could just be a "fake out", so I will be watching this pair very closely next week.

EUR/USD 4 hour chart – possible IH&S pattern if the current uptrend channel holds.

EUR/USD 4 hour chart – possible Gartley pattern formation if the uptrend channel is being broken.

ES Futures

Chopping Around Uncertainly

By springheel_jack - 16 years ago (23, Mar 2010 6:28:25 AM)

SPX bounced back into the ES rising channel yesterday and is back just below resistance. We may well be making a triple top. The action in recent days has a disturbing look of an IHS being made though, and that is something to watch this week, though the left shoulder has too much sideways trading for a good H&S pattern:

We should correct here. We have hit the top of the current internal SPX channel within the main rising channel and I'm still expecting to see a correction this week to the 1120 level as the obvious target:

USD has broken up from the declining channel of recent weeks and looks set to rise further. That should at least slow rises in equities while it is ongoing on past performance:

EURUSD bounced from strong support yesterday for what looks like a technical retracement only, and a break down through it would be confirmation that a major new wave down has started:

Oil has broken down from a rising wedge and has established a gently declining channel:

Gold has also broken down from a rising wedge and has also established a gently declining channel:

My feeling is still strongly that equities will correct this week, but I'm starting to lose confidence. We will need EURUSD to break support in the next day or so to back up my view, and a break with confidence through resistance at 1165 on ES would undermine the case for a correction badly.

One thing that I will be watching very carefully this week in terms of a longer term signal is the longstanding rectangle on XLF. It traded above the rectangle intra-week last week but closed back within it. A weekly close above or below it would be a strong signal for equities in the weeks afterwards. If we fail to correct this week then a close above it would signal that we will rise strongly in the weeks afterwards:

Chart on GLD (by Mike Paulenoff)

By TheTechTrader - 16 years ago (18, Mar 2010 11:28:44 AM)

Meltdown Mondays a Fond Memory (by Springheel Jack)

By springheel_jack - 16 years ago (15, Mar 2010 6:42:58 PM)

Well, it really did seem as though the expected interim top was in
and that the correction was starting on Monday morning. My ES channel
broke downwards overnight and it seemed we were away.

I wasn't too happy from an indicators perspective, as I had expected
a bullish Monday, and Mondays have almost all been bullish in recent
months. In the afternoon after the decline stalled I ran a line
parallel to the channel up from the 1085 low and it fit very well where
we had retraced to on Monday morning.

Looking at it now, it seems clear that the larger channel is the
correct one, so here is the updated ES channel, which has most
definitely not yet been broken:

One of the indicators that I have been looking at carefully is the
bullish percent index $BPNYA. That made some progress today and is
near, or possibly even at, a level which should signal an important
interim top:

I was surprised to see USD push up sharply from Friday's close. I had
found an in-channel H&S pattern on USD indicating to the bottom of
the USD rising channel, and have found those very reliable in the past.
However USD does seem to have turned back up with some conviction now:

There is some good reason to think that USD may have turned back up
now. EURUSD broke through its channel late last week, but that may just
have been an overthrow, it has returned today and may now start another
wave down:

Gold and oil seem to have made interim tops already, which is a good
indicator that we may well see an interim top made on equities soon. Oil has broken
out of its rising wedge and is making good progress down towards the
wedge target in the 72 area:

Gold has also broken out of its rising wedge, but presents a more
intriguing picture as over a longer timeframe we may have a large head
and shoulder top on gold indicating to the 950 area, which is something
to think about.

It may not play out, there was another more recent IHS on gold that didn't
play out, but H&S patterns on gold form often and generally do play
out. There are three smaller ones marked within the large H&S pattern that
all played out:

I think that we're very close to an important interim top now, and I'm
fairly certain we'll see that this week.It is obviously quadruple
witching opex this week though, so we may have some more surprises on
the way.