July Corn Possibly About To Pop - Exit

July Corn Daily

We broke out of the wedge to the downside and hit our Stop. Not much more to say. 

It looked very promising when we entered, but a significant percentage of trades don't work out. The best you can do is follow your process, that has a proven edge, and control your risk. You can't ensure a win when you enter a trade, but you can go a long way to control your risk.

Bottom Line:

Entered: 794 1/2

Exit: 781

Net: 781 - 794 1/2 = -13.5 * $10/pt = -$135.

Entered: 785

Exit:772 5/8

Net: 772 5/8 - 785 = -12.375 * $10/pt = -$123.75

Total loss: $135 + 123.75 = -$258.75

July Corn Possibly About To Pop - Update 7

July Corn Daily

We're still in the Gap, above the 38.2% Fibonacci level, and made a nice green candlestick, closing near the highs. This is somewhat bullish. 

However, we didn't close above the 8ema. In fact, we barely pierced it at all. This isn't very bullish. But we survived the weekend, and the trade still looks viable. 

Its reasonable to interpret this chart to imply we came down to this area to fill in the Gap. We did that. Now we're setting up to resume our upward trajectory.

This trade is going to continue to feel unconvincing until we close above the previous swing high, which was 810 1/4. If you look at the sequential swing highs and lows, you'll see we're forming a sideways wedge (or triangle). See the thin, white, angled lines.

July Corn Possibly About To Pop - Update 6

Sent this Tweet 9:34am ET

Sent this Tweet 14:10 ET

July Corn 15 min Close

Leading up to the Corn market open (9:30am ET), and after, the price action was bouncing between the bottom of the Gap and the 38.2% Fibonacci retracement level from the Daily chart. Its Bullish that we're getting strong support, but on the other hand, we don't have enough strength to break out up through the Gap. So its hard to have any conviction which way we break out of this range.

You can see above where I sent out a Tweet just after the Open that we raised the Stop to just under the swing low at the Gap bottom. That held all day. Nearing the end of the day, and the week, I wanted to exit if we saw any weakness. If we didn't see weakness then I want to stay in the trade over the weekend, thinking we'll continue the previous uptrend.

So, I used the existing Stop as a determinant of weakness. The Stop wasn't hit, so we're still long this trade. 

July Corn Possibly About To Pop - Update 5

July Corn Daily

Not much to say other than we seem to be getting support from the 38.2% Finonacci level as well as the bottom of the gap. Technically, I should have exited the position today because:

• We made a lower low and lower high today
• We closed below the 8ema
• We made a Doji candle, which is indecisive
• We made a lower swing high 3 trading days ago

But sometimes its ok to use some human judgement. I think its very likely we came down to fill in the gap, and now we can bottom out and start back up.

So, I want to rely on our Stop and give the trade some slack. If this was a mistake, and I should have gotten out today, then price will continue further down tomorrow and likely hit our Stop. My expectation is we head back up tomorrow.

July Corn Possibly About To Pop - Update 4

We got a gap fill exactly as I've been talking about. In fact it was even better than I planned for because it filled the whole gap. I entered the limit order 2 points shy of the full gap because gaps sometimes "mostly" fill rather than completely fill.

I sent these Tweets this morning as it was happening.

9:52am ET

9:59am

10:10am

By the end of the day, the 5 minute chart looked like this:

July Corn 5 min

Notice how we hugged the bottom of the gap all day once we reached it, even though the world was selling off around us today. Also notice the big bullish volume bar at the very end of the day and we closed above the 8ema, 20sma, and 50sma. There is also a possible Bollinger Band/Keltner Channel breakout pending. These suggest we'll drift upward from here. And like Louise Yamada says "The longer the base, the higher in space".

So, bottom line, we're back in this long trade:

Entered: 785

Stop: 768

Target: 860

July Corn Possibly About To Pop - Update 3

July Corn Daily

Haven't given up yet. The candles for today and yesterday form an encouraging candlestick pattern called a Bearish Harami. I say encouraging because I want to get back down to fill the gap and catch our limit buy order waiting at 785. Then we can head back up and go for the ride.

Tomorrow's candle could be important, if we don't just drift sideways. If we get a bullish candle tomorrow, I'll probably give up on this trade.

July Corn Possibly About To Pop - Update 2

July Corn Daily

July Corn 15 minute

July Corn futures came down to 792 3/4 after the gap up before heading back up, just missing our 792 limit order to get back in Long after the weekend. It drifted upward from there.

Now expecting a retrace down to 783 to fill the gap and bounce off support. See 15 minute chart (bottom chart above).

Changed our limit buy order to 785. Stop (768) and Target (860) are the same. If we get too close to the Target, I'll have to cancel the buy order.

So, in trying to protect against a big loss from a gap down, we missed the whole trade due to a gap up. No joy in Cornville.

July Corn Possibly About To Pop - Update 1

July Corn Daily

I don't believe this red candle represents a change in trend, however I sold our long position anyway. Why?Because it might be and today is Friday, which means 2 days of uncontrolled price action.

We didn't get a candlestick sell signal but we did get a lower high and a lower low, and a close below the 8ema (orange line). I really didn't like selling but a strategic retreat made more sense than taking an unhedged risk over the weekend in a crazy financial environment.

So, this is a risk management move more than an exit from the trade. That's why the title of this post says "Update" rather than "Exit". I intend to see how we open on Sunday night and maybe into Monday. If conditions warrant, I'll get back in long.

The loss from today's sale is:

781 - 794 1/2 = -13.5 * $10/pt = -$135.

July Corn Possibly About To Pop

July Corn Daily

July Wheat Daily

Today, 5/12/2022 at 12:00 pm ET, several grain related reports were released by the USDA. Wheat rocketed up, and this is the grain I wanted to buy, but the risk is too high for a pullback to the support level it broke through. So, I may get some wheat if it pulls back then bounces back up.

The corn market had a much more subdued reaction, yet still bullish. You can see yesterday and the day before formed a Doji Gap Up candlestick pattern, after bouncing off the 38.2% Fibonacci retracement level.You can also see Stochastics were oversold at the swing bottom. Finally, we closed over the 8ema and every other MA on my chart, on high volume.

I don't go out of my way to follow fundamentals, but the price of everything is going up in our high inflationary environment, which especially includes food and energy. Corn is used for both. This is generally bullish for corn. Then you have decreased grain exports from major supplier countries and bottlenecks in the supply chain. Also bullish for corn.

Also, the US Dollar has been screaming higher due to a flight to safety to the USD. A strong dollar should diminish prices, but corn rose today as the dollar ETF UUP made a new 2 year high.

So, based on all this bullishness, very near the market close at 14:20 ET, we bought a YC July futures contract for 794 1/2. I managed to get a Tweet out at 14:14 ET. Set a Stop at 768, just below the recent swing low, and a Target at 860, shading the 127.2% Fibonacci extension of 860.382 by just a little. We're using the YC mini-contract ($10/pt) rather than the full sized contract ($50/pt) to contain risk.

Summary:

Entry 794 1/2

Stop 768

Target 860

Risk 794 1/2 - 768 = 26 1/2 points

Reward 860 - 794 1/2 = 65 1/2 points

R:R = 65.5/26.5 = 2.5:1 which is great.