Mar Coffee

I gave my analysis on the continuation charts for Coffee, but here's the March futures contract.  Today we got a big bounce higher.  Could this be the start of the bottom? Remember, the commercials have a record long position, which is extremely bullish.  The question is not if, but when the market will have a big upward move.  I think it's sooner than later as I've put on two option trades:
11/14 bought 1 KC Mar 160 C @ 5.40
11/26 bought 2 KC Mar 150-162.50 C spread @ 3,112.50 debit
I'm a novice option trader to say the least so still experimenting, but too hard to buy futures on this trade setup.  I'm exploring options as a way to enter these specific trades as timing is difficult and can take a couple months to capture the big move.  These trades don't occur often, but when they do they can have explosive reversals.  Let's see what happens with this market the next couple months.

Mar Copper (update)

Copper hit resistance around where I figured: just below the 50 & 100 DMA plus the 6 point resistance line (which has now become 7 points).  We are seeing a real choppy move higher off the 11/9 lows, which is a sign of a weak uptrend.  The main obstacle in front is still those two moving averages and the resistance trendline.  If we can break above, then I can see a move to 3.64 for the next resistance zone.

mini Dow (update)

The past few days has seen this market stall just below the 50 and 100 DMA and now there's a 3 point downward sloping resistance line as well.  Today's action saw strong selling early into the previous resistance zone and then a snap back rally.  Old resistance became support.  If we get a break above the recent 12982 high tomorrow, then will we have a bullish ABCD pattern with shallow retracement and 3:1 right handed skewing.  I've pulled my original target 1 offers at 13025 and moved them to 13160.  If this pattern forms in the next 3 days the first upside target will be around 13350.  I would look to get out of another contract at that level.

Coffee (continuation chart)

A market to keep a real close eye on is Coffee.  This market has been selling off hard since the May 2011 highs.  However, according to the COT report the commercials are at record long levels and markets usually bottom when the smart money is at bullish extremes.  The hard part is the timing, which could be days or weeks away.  First, some interesting details supporting possible lows.  The monthly continuation chart shows an upward sloping trendline that has served as support numerous times since the Dec 2001 low.  Prices are getting near this area again.  Also, the RSI is oversold and hasn't been at this level since the 2001 bottom.  Could this be the area this market bounces from?  The weekly continuation chart currently shows a potential double bottom forming with bullish divergence on the RSI.  Finally, seasonally this market tends to bounce early Dec and rally into a May top with dips in Jan and Mar.  It could be too tough to time this market with futures so options might be a better play.  Options aren't my specialty, but I'm currently experimenting with them for COT based trade set-ups like this one.  I've put on a Mar bullish call spread (150-162.50 strikes) and will be looking for other possible trades in both options and futures in the next couple weeks.  I will show analyze the chart on the Mar futures contract this week.

mini Dow (update)

We were able to break through and hold the resistance level ~ 12750.  The only concern is that it was the day before and after Thanksgiving, which were both low volume days.  The upcoming week should give us a more valid indication of this market's recent strength.  First, on the positive side we closed above the 10 and 20 DMA, got a MACD bullish crossover, and broke above a downward sloping RSI trendline.  Second, some upcoming obstacles could be the 50 and 100 DMA, the monthly pivot @ 13185, and the swing high @ 13251.  My first target for exit is 13025, where I will get out of half my position.  My second target is just below the monthly pivot @ 13150, where I will exit one contract.  I will look to ride the final one lot with a trailing stop in case this market makes a run at new highs.

Mar Copper (Update)

OI has moved to the March contract, so we pick up the same pattern as the Dec contract.  New lows were never put in and a wider time range will form if those lows are breached.  Therefore, there are no more buy zone set-ups at lower levels.  However, this market is bouncing off an early support zone.  It wasn't an area I was comfortable buying into so I wanted to either wait for a candlestick pattern to form, see lower prices form by Nov 14th, or play a bounce above the Nov 13th high.  I ended up getting long on Nov 19th a tick above the Nov 13th high ~ 3.5090 with a stop below the recent lows ~ 3.4140.  Our initial target is the 78.60 retracement area ~ 3.755.  This buy set-up follows the logic that Copper traded into the first buy zone, but it wasn't supported by other indicators yet.  My ideal choice was to buy at lower prices, but after a few days of trading sideways and not making new lows caused some other supporting indicators to form.  These other indicators are: bullish crossover on the MACD, a bullish engulfing pattern, and a close above the 10 and 20 DMA.  Our first obstacle will be the 6pt downward sloping trendline that lines up with the 50 and 100 DMA.  I expect selling at this level.

mini Dow (update)

My long position had a nice follow through day after my entry, but stalled two days in a row at the resistance zone I mentioned the other day ~ 12750.  It will be interesting to see if we can break through this level or if we get a retracement instead.  I wouldn't be surprised to see a pullback.  It will be important for any pullback to be shallow otherwise a strong possibility of a retest of the lows exists.  Good news is we closed above the 10 DMA and we are closing in on a bullish crossover on the MACD.

Mini Dow

A similar pattern has been emerging in the mini DJIA as the mini S&P, but with a long signal activated tonight.  Therefore, I will move my analysis over to this market.  Similar setup with a weak downtrending market into a support zone.  You have the dominant structure a double top, followed by a secondary structure with a deep retracement, followed by two more supporting structures with medium deep and supershallow retracements.  The time frames have been getting smaller as well indicating a possible loss of downside momentum.  This move touched the 361/361 fib combination of the dominant and secondary structures, which is a possible buy zone if confirmed with other indicators.  In this zone we also had a monthly S2, and oversold RSI, and some old support levels.  Finally, we had a bullish engulfing candle pattern for on Friday.  I went long a tick above the high of this candle @ 12574.  This triggered two different buy setups.  First, I'm long 2 on the bullish engulfing pattern with stops @ 12433 (low of candle).  Second, I'm long 2 more on a superstructure trade.  Stop 1 is @ 12300 and stop 2 @ 12200.  I'm looking for a bounce to at least 13025.  Obstacles to this trade are it could move lower and test better support around the 78.60 retracement level @ 12274, which is another support zone at the 461/361 fib combo.  MACD stills shows bearish momentum.  We need to see a bullish crossover to feel better about the long position.  However, this is a lagging indicator and usually comes a few days after the bottom.  Finally, we have a potential strong resistance cluster ~ 12750, which includes the monthly S1.

Copper (update)

It's time to take another look at Dec Copper.  One thing to mention is Copper OI has moved to the March '13 contract, but will still look at Dec for now.  The Mar contract looks pretty much the same pattern wise.  The past few days have traded sideways creating a bigger time range the the most recent supporting structure.  Therefore, that one has been removed.  For this pattern to remain in tact we need to see new lows tomorrow or Friday to avoid creating a wider time range than the secondary supporting structre (shown on the chart as m deep and 3:1).  You are seeing continued RSI bullish divergence and a possible MACD bullish crossover looming soon.  I'd like to see some new lows and an attempt to get down to the BUY ZONE listed for a long entry.  I will also be looking for any candlestick patterns that may form in the next few days if we can't get down to my ideal level ~ 3.33.

mini S&P 500 (update)

The ESZ2 contract touched the buy zone 1 area today and formed another supporting structure in the process.  This latest one had a supershallow retracement with right handed skewing, which is not what you'd like to see when trying to fade the sell off.  Currently, there's still too much downside momentum to take a chance at getting long in this zone.  However, I wouldn't be surprised to see a bounce here as you have a cluster of 3 fib extensions combined with the monthly S2.  The RSI is reaching oversold territory, but the MACD still has bearish momentum.  I will be looking to enter long positions in zone 2 and zone 3 with stops below the 78% retracement around 1290.00.  A weak downward move like this will have a conservative bounce target of the 61-78 pct retracement back to the previous high with an aggressive target of new highs.

mini S&P 500

There's a potential buying opportunity in the ESZ2 contract.  The current downward move from the 9-14 high has been very weak.  The dominant structure was a double top, 2nd level supporting structure with a deep retracement, followed by 3rd and 4th level supporting structures with neutral deep and double top retracements.  Weak downward moves can create very good buying opportunities around fib extension combos (261s, 361s, etc).  The first buy zone is 1347-1356.  This is the 261 combo zone supported by a monthly S2 pivot.  The second buy zone is 1325-1333, followed by the third buy zone of 1302-1313.  I don't expect this market to trade below 1290.00.  The most recent move down from the 11-7 high @ 1431.75 has been strong.  This is preventing me from buying at zone 1.  I 'm going to play it more conservatively and look to get long near buy zone 2.  I'd like to see some signs of this latest move weakening into my target area.  Some other factors to mention: longer term chart looks bullish as long as the swing low of 1250 holds, the RSI has a downward sloping trendline that needs to be broken for this market to rally, we are looking for a bullish MACD crossover, and finally this market is in a seasonal bullish time.  This market typically rallies mid Oct into year end.  To recap, I see 3 possible areas for this market to bounce to retest recent highs.

Copper

The Copper market looks to be setting up for a potential buying opportunity.  The current downward move off the 9-19 high has been weak.  The dominant structure had a deep retracement with left handed skewing of 4:9 followed by a supporting structure with a medium deep retracement.  Retracements less than 50 percent are considered weak.  You can look for a bounce at the fib combinations of 261-261, 361-261, 361-361, etc.  Right now the area I'm looking to get long is in the 3.31-3.34 zone.  This is the 361-361 combination from the dominant and supporting structures.  There is also additional fib extensions from the 3rd and 4th level structures (supershallow and deep, respectively).  Another sign of slowing momentum is that the structures time ranges are getting smaller.  First one is 13 bars, second one is 4, third is 4, fourth is 2.  The first area for a possible bounce is at the 78% area of 3.386.  At this level you also have a monthly S1 pivot, a 361-261 fib combo, and a 4 point upward sloping trendline.  I'm looking to play this more conservatively and try to buy a little lower.  You have slight bullish divergence on the RSI, but the MACD has yet to give it's bullish crossover.  However, this often happens a few bars after the market bottoms.  I will be paying attention to the first area of support to see if any candlestick patterns form.  If so, I may enter early.  Finally, an important note is the copper market seasonally posts a late November to mid December yearly bottom that rallies into late April.  So, in summary you have a weak downtrending market that is providing buy signals near a time when it seasonally bottoms. 

Swiss Franc (Update)

I was out of town last week so sorry for the late update.  I got stopped out of my long position on November 2nd.  The 7 point upward sloping trendline was broken firmly and the market is now below all 4 moving averages.  It looks like the double top formation I mentioned earlier as a possible concern was triggered the other day.  The target is around 1.0367, which is a possible area for a bounce.  We will revisit this market as this pattern plays out.