Sent this Tweet 9:31am ET this morning:
"Dec Corn broke inverted Head & Shoulders this morning on USA CPI Report. We're long with first Target 547."
Here's the 9:27am ET chart I sent with the Tweet:
You can see on this chart at the market open that price had broken through and closed above the Inverted Head and Shoulders neckline. The upper, thick, yellow, vertical line is the measured move for a Head & Shoulders pattern. The thin, yellow, horizontal line is the halfway point at about 547. I have found that many more Head & Shoulder patterns reach the halfway point than the full extension. So I like to set the first target to the halfway point.
The top chart is the Daily chart and the chart underneath it is the Hourly chart. Both were captured after the close. On the Daily chart and the early morning chart you can see there was a gap down from 573 1/2 to 552 1/4 from 7/2/21 to 7/6/21 over the Independence Day holiday.
Since open gap's like to be filled, and we have an Inverted Head & Shoulders breakout, its a reasonable expectation for price to continue up into the gap.You'll also notice the I.H&S breakout is also a Frypan Bottom breakout.
The top 2 charts show price closed over the 8ema on the Hourly chart as well as on the Daily chart. On the Daily, we also had a Hammer candle on overbought Stochastics followed by a Bullish Engulfing candle.
All this suggests we have a significantly bullish set up. Even though, it is normal to briefly reverse and retest the neckline before continuing upward. We may get this tonight when the market re-opens at 8pm ET.
We entered long 8:41am ET at 537 1/2 using the YC Dec futures contract. Went long another one 9:49am at 539 1/4. Set the first target at half the I.H&S measured move at 547. Set the second target at 560, which is just under the full measured move. I think there's a good chance we'll go higher and get close to the top of the gap at 573 1/2, but I want to see what the price action looks like after the second target is hit before adding a third contract.
Today's high on my Interactive Brokers ZC chart shows as 547. Our target was 547 but the sell limit order wasn't triggered. Maybe its the difference in the Bid/Ask spread on the YC contract vs the ZC contract, but I did shade the actual target from 547 1/2 to 547, which should have taken care of a 2 tick price difference. Well, the drawing of the measured move is a bit of an inexact construction anyway, but to hit 547 on ZC and not trigger our order is quite frustrating. Bottom line is we're still long 2 contracts.
On the Hourly chart you can see we got some resistance from the 200sma. If we're going exit with a profit we'll have to get through and close over that line. But the 200sma is often a powerful support/resistance level which is respected by the price action. This means its likely we'll head back down to the neckline. Then the crucial retest will tell us if we continue back up towards our targets, or not, which would mean the halfway point of the measured move is all we get, and I've seen that happen in the past.
I set the Stop to 526 which is just below the 527 1/2 most recent swing low.
Summary:
Bought 1 YC Dec Fut 537 1/2, Stop 526, Target 547
Bought 1 YC Dec Fut 539 1/4, Stop 526, Target 560
Risk: ((537.5-526)+(539.25-526))*$10/pt=$247.50
Reward: ((547-537.5)+(560-539.25))*$10/pt=$302.50
R:R=302.50/247.50=1.2:1 Not great but acceptable on a high probability setup.
No comments:
Post a Comment