I woke up early this morning a little after 5:00 am ET. I stumbled into my office and started watching a 5 minute chart. That's the chart on top above. There was a nice cupping pattern, which is supposed to be bullish, but it started to fail and head down, as you can see. We were relatively close to the target of 1357 and had days worth of accumulated profits. I didn't like the way the cup was failing. I've seen some very steep drops occur in the past from such a pattern. Notice it was on high volume with overbought stochastics.
Also, I was cognizant of 2 market sensitive reports coming out tomorrow 8/12/21:
- Crop Production at 12:00
- World Agricultural Production at 12:15
So I quickly sold the position and retained as much of the profits as possible. Looking at the hourly chart above, you'll see we never reached the 1357 target and we did head down pretty far. I'm very pleased with my decision. We may get a bounce and rise up to the original target, but maybe not. I'm glad to capture what I could and miss that little downdraft.
At 5:31am ET I tweeted the equivalent to:
"Closed our long position in the November Soybean Futures Butterfly pattern. Sold at 1351 1/4 at 5:24am ET. Nice profit 1351 1/4 - 1317 1/4 = 34 points. Didn't like what I saw on 5 minute chart, very close to 1357 target."
Summary of the YK Nov Soybean trade:
Entry: 1317 on 1/4 8/4/2021
Exit: 1351 1/4 on 8/11/21
Profit 34 * $10/pt = $340.
If we used the full size ZS contract it would have been 34 * $50/pt = $1,700
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