Big Weekend Edition: Ultimate MACD

Charts in this issue: cocoa, copper, wheat, hogs, Australian dollar.

Introducing the Ultimate MACD

Ultimate MACD GuideThank you everyone who took the time to send in their suggestion for the new MACD manual. In the end we went with Lindsay’s suggestion for a series of THT Trading manuals with the same prefix. Ultimate MACD – a spin off of Ultimate RSI. I like it. In fact I want to write Ultimate manuals for other indicators. You’ll have to let me know if there’s anything of specific interest to you.

I’m really proud of this little manual. If you already are familiar with MACD you know it can be a very reliable indicator. What I’ve done in the manual is show you how you can make it even more reliable. I’ve also included some great MACD + indicator pairings to show you how you can combine MACD with other indicators for a really powerful signal generation system.

I really hope you like the manual and will give me your feedback on it. Your input means a lot to me. It helps me figure out what your needs are. If you let me know what you need, I just might be able to give it to you!

I also wanted to mention that this Wednesday I’ll be heading down on a quick trip to Mexico with the family. I’ll still be posting updates (internet connection permitting) but there will be no update Wednesday night because of travel. If I’m unable to continue providing updates while I’m in Mexico, we will extend your subscription for any downtime you might experience.

After what has been an unusually long and cold winter for the Pacific Northwest I’m really looking forward to the warmth and sunshine! Not to mention a margarita or two…

Enjoy this week’s issue,

Erich
[email protected]

Papertrades

Currencies Market Overview

Australian Dollar

This week we roll into the June contract for the currency markets and we see that the Aussie Dollar is sitting on support around the 7450 area. Technically this zone hasn’t been broken yet, but there is considerable downside pressure on the market as evidenced by the quick decline last week. Support was confirmed on Friday’s bounce higher, and this means we might see a pullback and a chance to sell from a better price. But in the meantime I’ll put a sell order below last week’s lows. If the momentum comes back into the market sooner than expected I want to be ready to short.

If the June Australian Dollar opens at or above 7510
SELL 1 June Australian Dollar (6A) at 7510 (stop)(day)

If filled: Exit Stop: 7740 (stop)(GTC)
Approximate Risk: $2300
Profit Target: TBA
Degree of Risk: Moderate to HIGH

Canadian Dollar

Watch List: Just like the Australian Dollar there is a lot of bearish selling pressure on the Canadian Dollar. Last week saw the market fall to the lows near the bottom end of a much larger trading range with Friday’s session reacting to the support in the 7350 – 7400 area. I think the CD is poised to head lower still, but I’ll wait for a proper pullback before setting up a trade here. The difference between the Canadian and Aussie Dollar trades is the stronger support at the Canadian Dollar lows. This has me a little hesitate about trying to sell here until we get more confirmation the sellers are serious about pushing the market lower.

Energies Market Overview

Crude Oil

Watch List – Crude finished last week on a very bearish note, and while I might have exited the trade a little early I can’t complain about the $3000 profit in just two days! If Crude gives us a pullback I’ll consider selling it again.

Financials/Indices Market Overview

NASDAQ

Watch List – Is this a double top? If it is we could be getting the correction everyone has been talking about for the last few months.

Grains Market Overview

Corn

Watch List – Almost all bullishness seems to have left the Corn market. I’ll be on the lookout for a shorting opportunity this week. I just need to see where the support is before I get in.

Soybean Oil

Another strong bear day in Bean Oil found my profit target without difficulty. This is another trade I considered running out, and I’ll probably regret taking profit early, but it’s already in the bank so no I’m on the lookout for the next selling setup.

COMPLETION of Short May Bean Oil (ZL) at 3370 (March 7)
Profit Target: 3290 (March 10)
Approximate Profit: $480

Wheat

It took a while but I sold Wheat on Friday. It was another one of those less than desirable entries, you know the ones, right near the high, or in this case, low of the day? But I’m short now and the low closing price is encouraging for Monday’s session. Technically the market has broken the bullish trendline so I’m looking for a little more follow through as a result. A close below the 438 from the end of February would be a good start in that direction.

CONTINUATION of Short 1 May Wheat (ZW) at 440 (March 10)
Exit Stop: 470 (stop)(GTC)
Approximate Risk: $1500
Profit Target: TBA
Degree of Risk: Moderate to HIGH

Meats Market Overview

Feeder Cattle

Feeder Cattle backed up on me Friday and took out my exit order. Obviously this wasn’t what I wanted and while I thought I was on the right side of this trade it’s now starting to look like Feeder’s might retest the highs before the bears show up again.

Lean Hogs

Hog prices continued honouring the bullish trendline last week but failed to put in a new swing high. This suggests the market is still mostly bearish and a good one to continue selling this week on a break below support. I decided to bring my entry in a little bit and put it just below the trendline support, but not too close. This is the Hog market after all. And they can be as unpredictable as any of the Meats. Given my recent spanking in Feeder Cattle I’m also a little gun-shy.

If April Lean Hogs opens at or above 6630
SELL 1 April Lean Hogs (HE) at 6630 (stop)(day)

If filled: Exit Stop: 7040 (stop)(GTC)
Approximate Risk: $1640
Profit Target: TBA
Degree of Risk: Moderate

Metals Market Overview

Copper

It was unfortunate that Copper prices bottomed just a few ticks from my profit target last week. This leaves me with a difficult decision for this week: do I leave the stops back or bring them in? I opted to bring the stops in, and not just to breakeven, but above Friday’s highs. The support last Friday was strong. Notice how the market closed above Thursday’s highs. That’s a good indication the market will head higher. However if the bears show up in force I might still be able to get the original profit target, but I doubt it.

CONTINUATION of Short 1 May Copper (HG) at 26380 (February 23)
Exit Stop: 26200 (stop)(GTC)
Approximate Risk: $0
Profit Target: 25500 (limit)(GTC)
Approximate Profit: $2200
Degree of Risk: HIGH

Softs Market Overview

Cocoa

The Cocoa trade was getting a little too close for comfort but the bulls showed up in a big way before the weekend and pushed the market higher. We still haven’t broken the bearish trendline but this is a good start. I would expect to see higher prices into this week so I’m going to do my best not to get stopped out early!

CONTINUATION of Long 1 May Cocoa (CC) at 1940 (March 3)
Exit Stop: 1870 (stop)(GTC)
Approximate Risk: $700
Profit Target: TBA
Degree of Risk: HIGH

Lumber

Watch List – Here’s another market I haven’t looked at in ages, but it can be a good moving market and it tends to respect its seasonal tendencies. Speaking of which, Lumber is getting into a more bearish time of the year for this commodity. May Lumber is currently sitting on trendline support, but a bounce and rejection of the market to move higher would be a good excuse to sell.

Sugar

Watch List – There’s no question Sugar is in a bear market now. We just have to be on the alert for a good selling setup. Maybe a pullback to the 1900 (May) area would be a good start?

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