Top chart is the July corn futures 4 hour chart showing the whole Fibonacci range we're working with. The scrunched up notes to the left are from a different trade on a Gartley pattern. The next chart is the same chart zoomed in for a better view.
This trade is a continuation trade based on the assumption the 50% Fib is going to be hit. It looks like we're forming a Bearish Flag that is about due to break to the downside. It seems more likely this retracement will hit the 50% level than not. So this bearish price action is not quite cooked.
Here's what I see:
- Double Top
- Hasn't yet hit the 50% Fibonacci level
- Flag similar to previous 2 flags in time and size
- 8ema resistance (closed right on it)
- Trend Line resistance
- Stochastics lifted above the overbought condition
Because we already have what could be considered 3 drives down (kind of looks like an Elliot Wave but I'm not very knowledgeable on those), its reasonable to anticipate a significant move to the upside. That makes this a possible higher risk trade. So, I want to use the YC mini-sized Corn contract ($10/pt) rather than the ZC full-sized contract ($50/pt).
The Target is the 50% Fib, which coincides with the 200sma at 626 3/4. We're setting the actual target to 627 to account for the Bid/Ask spread and slippage.
Setting the Stop to 664, which is just a little longer than the length of the longest leg in this down move. The longest leg is 732 1/2 - 703 1/4 = 29 1/4. Add that to our swing low 29 1/4 + 633 = 662 1/4.
We sold a July YC futures for 652 1/8 at 14:18 ET, 2 minutes before the market close.
Summary:
Entry 652 1/8
Stop 664
Target 627
Reward 652 1/8 - 627 = 25 1/8
Risk 664 - 652 1/8 = 11 7/8
R:R = 25.125/11.875 = 2:1
We don't have anymore significant crop reports for the rest of the month.
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