Breakfast commodities – the best way to start your day!

By on Aug 7, 2017

As I sip my first cup of coffee, gazing out the window and wondering what the future holds, it’s good to know that some trading options will shake the sleep from my brain and bring a smile to my face. After a slow, steady scan of the commodities on my watchlist and narrowing it down to stronger trends and cleaner price action, there are a few that have my full attention.

Oats are one good way to satisfy my hunger. The chart is showing an appetite for climbing higher, but I need a great entry into this current uptrend. I also know that what goes up must come down, and so the most sensible place for me to anticipate an entry is when price decides to take to take its next breath.

The monthly Oats chart is in an uptrend producing higher highs, and higher lows and the weekly chart is ideal for my entry (also in an uptrend), giving me enough time to qualify the entry when the day comes.

The most sensible entry I’ll be anticipating is as price returns temporarily to an area between 263.00 and 257.00, but more likely 263.00, as this is also a precise 50% retracement, in terms of confluence.

Both of these levels reflect historical support and resistance levels offering some nice stop-loss protection below 250.00. Just as I don’t overdo the sugar on my Oats, I don’t overdo the risk. So I’ll only be investing in a small portion and always with a view managing my risk. The next key level of support and resistance (S/R) is up at 322.50, so I’ll be considering closing out my positions entirely by 322, and almost certainly banking in two increments as price moves in my favour. In this chart, I would ideally expect a nice bullish candle to form in the buy zone between the 10 & 20 moving averages, sitting strongly on top of either of the two levels of S/R. Then I can choose my entry above the close version of that candle, while my stop-loss is protected on the other side of both levels of S/R.

Now, of course, to wash this all down with another sip of coffee – specifically Coffee Robusta. There is a nicely bullish monthly chart, especially as the 50, 20, and 10 moving averages are aligned perfectly, and a bullish candle forming in the buy zone near the 10 moving average.

The weekly chart looks on the verge of bursting to the upside. We can see a clear series of higher highs and higher lows, running up into a temporary congestion level at 2,130. Once price action breaks above this level, it will likely head onwards up to 2,230, So my entry should be at least at 2,142 with profit taking just below 2,230. Also, I can place my stop-loss perfectly just below 2,100 if I am feeling aggressive in my assessment of the move, or more conservatively below 2,045, but in both cases, I will of course be risking the same amount.

And finally, a confession. I also have a sweet tooth. I notice the Sugar weekly chart has a lovely downtrend in place (with steady selling momentum and the 50, 20 and 10 moving averages all in the correct order), as does its monthly counterpart. This has beautifully provided me with a bearish rejection candle in the sell zone, between the 10 & 20 moving averages.

I’ll certainly be considering placing my entry below the low of this bearish candle (at 13,985) and my stop-loss just above its high. Should price action break below the low of the candle in the coming days, and resume the downtrend, I’ll be planning to close out my trades and bank profits a fraction above the S/R level of 12,700.

Now, having satisfied my appetite for this week’s trading activity, and given these breakfast commodities their due attention, I’ll move on to finishing my morning newspaper read – what’s going on in the rest of the world, I wonder?

Happy Trading!

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