Bullish Jan 2023 Beans

Jan 2023 Soybeans Daily Chart

Went long January Soybeans with a Jan 1450/1460 Call Spread for 5 1/8. Multiplier is $50/pt, so cost was 5 1/8 * $50/pt = $256.25. Today's bean close was 1459 1/2, which means our Call spread is very close to 100% intrinsic value. If the futures price stays over 1460, we'll see the valuation of the option spread widen out from 5 1/8 to 10, which would double our investment. It'll widen out because the time value of the long option will wane as we get closer to expiration on 12/23/2022.

See the yellow annotations on the chart above.

Went long because I see:

• Flag pattern break out.
• Scoop pattern about to break out.
• Bollinger Band/Keltner Channel squeeze about to break out.
• Left/Right Combo candlestick pattern.
• Close above the 8ema, with continuation today.
• High up volume.
• Above all Moving Averages.
• No Grain Reports for at least 1 week.

Soon as the order was filled, which was 14:18 ET, 2 minutes before the grain futures market closed, I entered a sell order for 9 3/4.

The expected bullish move of the Jan Soybean futures price is the D point of the AB=CD pattern (see thick yellow angled lines). D can be calculated from 1406.75 + (1469 - 1366.75) = 1509. This is very close to, but just shy of, the previous swing high of 1512.25.

Summary:

Entry: 1459.

Target: 1509.

Stop: not necessary because our risk is fixed and affordable, thanks to the option spread.

Risk: 256.25

Reward: (9 3/4 - 5 1/8) * 50 = 231.25

R:R = 1:1 which doesn't sound great but expect this a high probability setup.

JNJ No Tears Gartley Pattern

JNJ 6/21/22 Daily Chart

Went long with a JNJ Aug 175 Call on 6/14/2022 for $3.52. At the time, the stock was 168. I entered due to the confluence of the AB/CD, 200sma, and 61.8% Fibonacci retracement. But I got in early, without confirmation. We got that confirmation today, with a close above the 8ema.

Here's what I saw today:

• Bounced off 61.8% Fibonacci of the Gartley pattern
• Bounced off 200sma
• Bounced off AB=CD of the Gartley pattern
• Oversold Stochastics
• ADX Quit the Down Trend
• Trend Kicker candlestick signal
• Close over 8ema

Set the Stop to 167, just below the D point.

Set the Target to 179, just below the .618AD level of the Gartley pattern.

Maximum Risk is the full cost of the Call option, $352. But a better gauge for comparison to other trades is to use the stock value:

Risk = 168 - 167 = $1.

Reward = 179 - 168 = $11.

R:R = 11/1 = 11:1 which is ridiculously great. To be fair, the initial risk wasn't the current Stop. The initial Risk was 168 - 155 = 13, which would represent a bad R:R. 

Let's look at the R:R if I got the 175 Call option at the end of today, but based on stock price. Today's close for JNJ was 173.01:

Risk = 173 - 167 = 6

Reward = 179 - 173 = 6

R:R = 1:1 on this basis, which is considered too low. However, this trade is based on the Gartley pattern, which has a Win Rate of 75%. So, given the Win Rate, 1:1 is acceptable.

ZIM Zooming Down - Update 3

ZIM Daily 6/13/2022

Today we opened gap down then retraced to fill in most of the gap. But today's price action was so bearish, we headed back down before we could fill the full gap.

We ended the day with a Doji candle but near the bottom of the range. Today's low was 47.68. The previous swing low (our B point in the AB=CD) was 48.21, which means we confirmed the AB=CD pattern by surpassing the B point. This is encouraging for our trade.

But, take a look at the Stochastics panel on the bottom of the chart. It is definitely oversold now (under 20). This is a concern as it provides a kind of pressure to reverse the price action. When Stochastics are oversold, I start looking for the next likely support level. I see it as the 61.8% Fibonacci level, which also coincides with a previous swing low on 10/6/21 at 42.14. The 61.8% Fib can be calculated as:

A-.618(A-X) = 91.23-.618(91.23-11.34) = 41.86

So, I changed the target for the new July 40 Put option to 42.50, which shades the previous swing low of 42.14 to account for slippage, Bid/Ask spread, and premature buying pressure.

Given the strong momentum of the current down leg, characterized by gaps and relatively long candles, I'd expect we'll ultimately get down near our original target at 29. However, it seems likely we'll get a bounce before then. I'd rather exit and re-enter later than ride out the bounce.

Also, there is a potentially big market moving event this Wed. 6/14/22 at 14:00 ET. The FOMC rate decision. It would be great to capture profits and be out of the market before then. That's a supporting reason to raise our target.

ZIM Zooming Down

ZIM Daily

Shorted stock ZIM this afternoon by buying a July 55 Put for $3.20. Quarterly Earnings is 8/17/22 before the market opens. I Tweeted this out at 15:39 ET.

Here's why I'm bearish:

• Kicker candlestick pattern
• Blue ice failure
• Negative Stochastics Divergence
• Close below 8ema,200sma
• High volume, Big bar
• AB/CD

A Kicker pattern is when you have 2 candles separated by a gap and facing different directions (Up and Down).

Blue Ice Failure I learned from Steven Bigalow in candlestickforum.com. Its when price comes up from below the 50sma, breaks through it but can't hold it, and falls back through the 50sma. Steve uses blue for his 50sma while I use red. That's why he calls it Blue Ice Failure.

To see the NSD, look at the downward angled thick, white, line segment in the Stochastics panel at the bottom of the chart. Then see the upward thick, white, line segment on the price chart directly above. Price was heading up while Stochastics was heading down in the same time period. That's Negative Stochastics Divergence and a bearish indication.

The AB/CD pattern has not been confirmed yet because it hasn't closed below the B point at 48.21. So I did get in early but I figured it was a reasonable decision thanks to all the other bearish indications. The measured move for where to expect price to go is the D point where AB=CD, which can be calculated by D=C-(A-B)=71.40-(91.23-48.21)=28.38.

The calculated D point coincides with the 78.6% retracement at A-.786XA=91.23-.786(91.23-11.34)=28.44. So this area makes a good target.

Also, if we get to the target, then we will have set up a Gartley pattern. So the Target is a great place to reverse our position.

Summary:

Entered 6/8/2022 15:13 ET, ZIM=58.91, Bought July 55 Put for $3.20

Target 29 (which is shaded a little to account for slippage, bid/ask spread, and an early completion)

Stop is just above the Kicker at ZIM=70

Using the stock to calculate the risk:reward ratio:

Risk = 58.91 - 70 = -11.09

Reward = 58.91 - 29 = 29.91

R:R = 29.91/11.09 = 2.70 which is great.

NVDA Chips are Up - Update 1

The daily chart above shows continuing progress. Today we gapped up at the Open, then filled the gap, and rose back up to close with a Doji candle.

The gap up was a Bullish indication of course, but when you first saw it, you had to be concerned whether this was an exhaustion gap due to the very high and persistent over-bought Stochastics. We won't really know until tomorrow's Close, but I think the fact we climbed back up enough to close as a Doji, and closer to the top than the bottom of the candle, is an indication there is still momentum to the upside.

An easy decision to hold the position.

NVDA Chips are Up

The Daily chart above on NVDA shows a Bullish setup:

• Double/Triple Bottom
• AB/CD pattern confirmed by price exceeding the B point, and on high volume.
• The C point is only a 25.2% retracement. That's Bullish.
• Today and yesterday form a Trend Kicker candlestick pattern.

For a Target, take a look at the following:

The vertical, thick, white line segments show a measured move of the double bottom.

The diagonal, thick, white line segments show the AB=CD measured move.

The 161.8% Fibonacci extension of the green range is approximately 308. This is between the 61.8% and 78.6% Fibs of the yellow range.

Previous swing high was 313.30.

I like a conservative Target of 308.

Near the equity market close today I got an April 14th 290/295 Call Option Spread for $1.71. A spread will greatly reduce the capital at risk, limit the maximum risk to the cost of the spread, and help mitigate the Theta time decay of the long option in the spread.

I entered 2 sell orders. One is a $4.90 limit order for the spread, since it has a maximum value of 295-290=$5.00. The other is to sell the spread with a limit order at the mid-point between the Bid and Ask if NVDA stock price hits 308.

Risk: $171

Reward: It depends how long it takes to hit the Target, but the maximum reward would be $490.

R:R = 490/171 = 1:2.9 which is great.

June AUD/USD Russian Doll Gartley Patterns

This is going to be a crazy trade. I was setting up the Gartley pattern on the AUD/USD 60 minute chart above and when I was finished, I noticed there's another smaller Gartley pattern inside the first.

The bigger Gartley, let's call it the 1 hour (1h) Gartley, is still establishing its C point. I was going to wait for the D point before entering a trade. But the smaller Gartley, let's call it the 15 minute (15m) Gartley, is establishing its D point. 

The 1h Gartley has white comments and green Fibonacci's. The 15m Gartley has yellow comments and yellow Fibonacci's.

So, we can enter the 15m Gartley, but instead of using the usual .618AD Target, we can go for a bigger Target of the 1h Gartley D point. However, I want to be conservative and trade each pattern separately.

I got 2 AUD June futures using mini-contracts because the risk is 85 pips. If I used 2 full contracts I'd be risking $1,700.

I bought the 2 futures at .7372. The Stop for both is just over the X,A point at .7457. The first Target is the .618AD of the 15m Gartley. Using the current D value of .73775, the Target is:

.73775-.618(.73775-.72555)=0.7302104

The second Target is the 78.6% Fibonacci of the 1h Gartley XA leg, which is .71797. Also, using the current C point, the calculated D point is:

.73775-(.7455-.72555)=.7178, which is amazingly close to the .71797 Fib.

We'll shade the second Target a bit because on the way there, we'll encounter the .7200 level, which is a round number. You might point out we'll also be encountering the .7300 level, but that's nowhere close to the Target. Also, there is some possible support from a gap down and swing low from late February. This adds to desire to shade the second Target up to the .7200 level.

Now, here's more craziness. There's a speaking engagement in Australia by RBA Govenor Lowe at 17:15 ET, while the FX market is closed between 17:00 - 18:00. So, come 18:00 this evening, we may get a gap open but there's no telling in which direction. I could have waited until after 18:00 to enter, but I decided I can handle the risk.

Bottom Line:

Trade 1

Enter: .7372

Stop: .7457

Target: .7304

Risk: .7372 -. 7457 = -85 pips.

Reward: .7372 - .7304 = 68 pips.

R:R : 68/85 = 1:0.8 This looks bad but remember the Gartley pattern has a 75% Win Rate, which means you could have a R:R of 1:0.3 and still break even. Plus we have the 1h Gartley that may pull down price further than usual.

Trade 2

Enter: .7372

Stop: .7457

Target: .7201

Risk: .7372 - .7304 = 68 pips.

Reward: .7372 - .7201 = 171 pips.

R:R = 171/68 = 1:2.5 which is great.

March Bear Corn - Update 1

Zoomed in Daily Chart

We had a nice continuation day today. Got a lower high and a lower low. Still plenty of runway on the Stochastics before its oversold. Definitely still Bearish.

For comparison, I added the 2 major previous down legs. See the yellow and green diagonal line segments. See yesterday's wider view to see where these previous moves came from. We already dropped as far as the green line. We did that today. The yellow line takes us down a little further and pretty close to our target. If you think of these moves as the BC leg of an AB/CD pattern, you often will see these can be similar in length for a given trend. You might call it symmetry. You can use symmetry as a rough measure of a similar future move.

Tomorrow is Non-Farm Payroll day in the USA at 8:30am ET. I doubt it'll have much influence on the Corn market, but I haven't done any research to back that up. If it does move, I'm going to do my best to let the Stop handle it. I don't want to get shaken out in the morning and then see a big reversal back down by the end of the day.

It was an easy decision to hold the position at the end of today. Tomorrow will be harder because its a Friday and weekend risk always weighs on me, especially with what's happening with Russia. But I'll leave that for tomorrow. As for today, we're looking good.

March Bear Corn

Wide Daily View

Narrow Daily View

Entered a short on March Corn Futures from 622 1/4, using a YC mini contract at $10/point, right at the market Close today. ZC is the full sized contract at $50/pt.

The Daily charts above are very busy. Please focus on the light blue annotations. Here are the bearish indications I see:

• 3 Drive to a Top
• Completed AB=CD (see the 2 longest, thick, white, angled, line segments)
• Bounce off Previous High (see the wide view chart)
• Bearish Harami candlestick pattern
• Bearish Engulfing candlestick pattern
• Close below 8ema
• Large candle with Large volume
• Negative Stochastics Divergence
• High Stochastics
• Bounce off Lt Blue 161.8% Fibonacci extension

Selecting the Target at the top of previous congestion, which is coincident with the 50 sma (thick red wavy line). This at about 600.

I set the Stop at 643, just above the recent swing high of 642 1/2.

I think its likely we'll get a bigger pullback but I want to be out of this trade before the big USDA reports on 2/9/22 at 12:00pm ET. Sometimes you see this list abbreviated, or nicknamed, the WASDE Report. Here's the list of reports due out at 12:00

So, in addition to a Stop and a Target, I also entered a conditional order to close out this trade at 11:45am ET on Wednesday 2/9/2022.

Summary:

Entry 622 1/4

Stop 643

Target 602

Risk = 622.25 - 643 = -20.75

Reward = 622.25 - 602 = 20.25

R:R = 1:1 which is worse than the recommended minimum 1:2 ratio but this looks like a high probability trade.

March Soybeans Formed a Bearish Gartley

Been trying to catch the D point on the Daily chart above. The first two, D1 and D2, failed but D3 led to price action breaking through the 8ema and closing below it with confirmation, which gives confidence this is the one. Its looking so weak, I decided to get in short, even though we're pretty far from the 1415 D3 point already. Even down this far, we still have a good Risk/Reward. More on the R:R later.

The proper Stop for a Gartley pattern (aka XABCD) is just above the X point, but that represents too much potential loss (Risk) if we hit it. So, we're using the recent swing high (D3) instead of the X point.

The Target is the usual .618AD, which is the 61.8% Fibonacci retracement of the A point to D point range. You can find all the Targets to consider in the box on the chart.

So, right at the Close today, I shorted a YK mini-contract at 1361 1/4.

Summary:

Entry: 1361 1/4

Stop: 1416

Target 1279 (shaded a little from D3 point to allow for slippage and the Bid/Ask spread)

Risk: 1416 - 1361.25 = 54.75 points * $10/pt = $547.50

Reward: 1361.25 - 1279 = 82.25 points * $10/pt = $822.50

R:R = 822.5/547.5 = 1.5:1 which is actually quite good if you consider the Gartley pattern has a 75% success rate at the .618AD Target.

Ag Reports Cut the Corn

Yesterday 1/12/22 at 12:00pm ET there was a big set of Agricultural reports released. You can see the reports schedule here:

https://www.usda.gov/media/agency-reports?start_date=1%2F11%2F2022&end_date=01%2F14%2F2022

Here's the list of reports that came out yesterday:

As often is the case, the chart above is quite busy. Please focus on the green text boxes.

The response to the release yesterday was a long legged Doji candle. This represents indecision. My interpretation is the market needed to digest the information longer than the time left before the Close.

I waited until just before the Close today to check today's price action. As you can see on the Daily chart above, we have a very small wick on the top of the candle followed by a relatively large red down candle, and a close near the bottom of the candle. I interpret that to say the market digested the reports and decided it was Bearish. Who am I to argue.

Over the past few weeks, you can see we rejected off a confluence of Fibonacci levels from 4 different ranges. The high was 617 3/4. Then we formed a triangle going into the big reporting day, which makes sense. The resolution is a break out to the downside. Triangles are notoriously unreliable, in that the price can break out one way and quickly reverse and break out to the opposite side. However, given that the break out is in response to the reports a day after the release, I think we can reasonably expect this is the beginning of a down trend.

Also, notice the significant volume yesterday and today. This looks like the market is serious about this price action. 

Notice the triangle pattern led to a Bollinger Bands/Keltner Channel Squeeze. We haven't broke out of the BB/KC yet, but if price continues down we will. If we break out of the BB/KC we can expect 5-7 days of continued momentum to the down side after the break out.

Stochastics are in the mid-range, so we have some runway here before we need to start worrying about being oversold.

OK, let's consider Targets. In the triangle you'll see 2 thick, green, down angled lines. This illustrates an AB=CD pattern. The calculated D point is 578.25. This coincides with a clone of the triangle top trend line that is positioned at the low of the triangle.

Let's look at Fibonacci levels based on the whole up leg since 9/9/2021 with a low of 506 3/4. The top of the up move is the high of the triangle at 617 3/4. A 50% retrace down is 562.25, and the 61.8% retrace is 549.152. The calculations are shown on the chart in green.

There is a 200sma (thick, white, up angled line) which looks like it might be flattening out at 562 1/2.

I like that the 50% retracement (562.25) and the 200sma (562.5) are very close to the same level. So this seems like a good target for now.

I'm going to use a Stop just above the previous swing high within the triangle at 611 1/4.

Just before the Close at 14:13 ET I sold a YC mini-contract for 587 3/4.

Summary:

Entry: 587 3/4

Stop: 612

Target: 563

Risk: 612 - 587.75 = 24.25

Reward: 587.75 - 563 = 24.75

R:R = 1:1 which isn't great, but I consider this to be a high probability trade, which makes it acceptable.

High Risk March Wheat Long

Like the title says, this is a high risk trade at the time I entered it, which was at the Close today for 769. One reason its high risk is because we don't have confirmation yet, which would be a higher Close, or higher high and higher low, by the next trading day or two.

But a much greater reason for high risk is that the quarterly "Grains Stocks Report" is due out tomorrow 12:00pm ET. This can whipsaw the grains markets, and unless you hire Mr. Beeks, the reaction to the report is a craps shoot. So we do not want a position in the market at 12:00pm.

Must See Movie "Trading Places"

However, due to what I see on the Daily chart above, the odds suggest we should get some more upside, at least up to the Report release. Here's what I see (yellow box on the chart):

• Bullish Engulfing candlestick pattern
• Doji Sandwich candlestick pattern
• Close over the 8ema
• Low Stochastics
• Tweezer Bottom candlestick pattern
• Support from Head & Shoulders half measured move 1st Target
• Support from AB=CD 760.50 D point
• Support from 200sma

Since its a high risk trade, I'm using a tight Stop of 747, just under the bottom of the previous Doji candle low. Also using the YW $10/pt mini-contract.

For the Target, I'm looking at the 808 1/2 end point of a clone of the previous leg up. See the thick, forward angled, yellow lines. But I'm shading it a bit to the 50sma, which coincides with the Head & Shoulders Neckline, at about 795.

IMPORTANT: I'm setting an automatic conditional order to sell the position, no matter what, at 11:45am ET.

March Wheat did an about-face - Update 3

Very good day for our short Wheat trade. On the Daily chart above you can see:

• We set a lower high and a lower low.
• We went lower on increased volume.
• You can see the bottom BB has separated lower than than the KC.
• Each of the last 3 candles have bigger bodies, showing an acceleration.
• Stochastics are not yet oversold.

All of the above are constructive for our short thesis. However, we are very close to previous support at 751. Tomorrow will be very important to see if we breeze by the previous swing low, or react to it and get a pop. This made me want to cash out our current profits today, which are relatively attractive. But that could be a big mistake if price continues its cascading drop off.

Another thing that made me want to take profits was Soybeans. Corn continued to look Bearish but Soybeans did a Doji Gap Up off the 8ema on high volume, which is quite Bullish. This gives me concern, but we have to remember while each of these grains are in the same commodity class, they are also different markets.

Just the fact that I'm looking at a nice profit that I don't want to lose is enough pressure to want to exit. But that's to be expected and a trader must be able to deal with that emotion, or they're doomed to keep leaving more money on the table than they should.

So, at the market close, I had to suck up my fears and go with the odds, which is to leave the position on.

However, I think the 729 target might be a little low. The D point of the white AB=CD is 730.50, and the 200sma has risen to 728.93. So, I raised the Target to 732.

March Wheat did an about-face

Above is today's Daily chart of March Wheat futures right after the grains market closed. Just before the Close I shorted a YW mini-Futures contract at 790. The mini-contract is $10/pt, while the full size contract is $50/pt.

In the previous Wheat trade on this blog I wanted to go long due to a Gartley pattern. That Bullish pattern has not yet been violated, so this is a bit of a contradictory situation. However, my Target for this Bearish trade is above the X point of the Gartley pattern, so both trades can work.

Here is what I saw that caused me to go short today right before the market Close:

• Head & Shoulders
• Bearish engulfing candlestick pattern
• Continuation by the next candle
• Close below the 8ema, 20sma, and 50sma
• Close below the H&S Neckline
• Possible Bollinger Band/Keltner Channel Squeeze
• Possible AB/CD (light blue angled lines)

However, I also see we had support from a previous Support/Resistance level, and we formed a Bullish Harami candlestick pattern. Today we formed a Doji candle which represents indecision.

We could turn right around and head back up from here to hit the Gartley .618AD Target, and we haven't yet confirmed an AB/CD by dropping lower than the B point at about 750.

So, I don't have a lot of confidence in this Bearish trade yet, but there are enough indications where it makes sense to enter the trade, albeit lightly.

I set the Stop at 801. I picked 801 rather than 800 because 800 is a round number. It's just above the H&S Neckline, 8ema, 20sma, and 50sma. It's a bit of a tight Stop, but this is not yet a high probability setup. And if we break through all that resistance, then the downward momentum that got us where we are can't be very strong. So stopping out early might be a good thing.

I set the Target near the 727.643 78.6% Fibonacci level of the yellow range, which coincides with the 200sma, the measured move of the white AB/CD, and shades the light blue AB/CD and the full measured move of the Head & Shoulders.

Summary:

Entered: 790

Stop: 801

Target: 729

Risk: 801 - 790 = 11 points

Reward: 790 - 729 = 61 points

R:R = 61/11 = 1:5.5 which is ridiculously good.

Wheat Marching to a Reversal - Update 1

The previous post showed we were waiting for price to get down to 740 for a long entry. We got down as low as 751, so our order never triggered.

Now, we had a bullish looking day today. We closed over the 8ema, 34ema, and 50sma. We closed over the Head and Shoulders neckline, and closed at the top of the candle. You could also argue we formed a double doji sandwich candlestick pattern, which is bullish. Also, 3 trading days ago we bounced off the 61.8% Fibonacci retracement in the yellow range. However, we haven't yet closed over the 20sma, or even penetrated it.

Do we abandon our thesis that price is coming down to the 740 area because of all the bullish indications above? I'd say not yet. I'd like to see confirmation in the form of a close over the 20sma with Stochastics not in the overbought condition. If we get this tomorrow, then we'd have to conclude we reversed the recent down trend and have entered an up leg, which would rejoin the longer term up trend.

Wheat Marching to a Reversal

The Wheat March Daily chart above looks very busy but its a really cool setup and I'll explain the whole thing. I'll explain the different elements of the setup then pull everything together at the end.

Let's start on the left and work our way right. The big, thick, white, angled, lines represent an AB/CD pattern. The calculated top of the pattern is 856.75 (see calculation on the chart), but the actual top was 874.75. This range is also shown by the large, vertical, green, downward pointing arrow.

The anticipated retracement of the green range is 50%,  61.8% or 78.6%. The box with green text on the chart has the calculations. 50% is 750.75, and 61.8% is 721.5%. Yesterday's candle low was 751, which is only a quarter point shy. You could certainly argue today's bounce was a rejection off the 50% Fib of the green range. If we say we hit the 50% Fibonacci of the green range, and price goes lower, then the next expected move is to the 61.8% Fib.

The yellow range is a possible Gartley (aka XABCD) pattern setting up. The X, A, B, and C points are labeled in white. The D point hasn't been determined yet. The shorter, thick, white, angled, lines represent the AB/CD pattern within the Gartley, and the bottom end of the line on the right is the calculated D point. You can see the calculation in the box with white text. The result is 730.5.

The candle low yesterday and today is finding support at the 61.8% Fib of the yellow range, which is 759. You could certainly argue today's bounce was a rejection off the 61.8% Fib of the yellow range. If we say we hit the 61.8% Fibonacci of the yellow range, and price goes lower, then the next expected move is to the 78.6% Fib.

The purple lines represent a Head & Shoulders pattern. You can see the traditional measured move by the purple vertical line dropping down from the neckline. But, in my experience, the better target is half the measured move. That's represented on the chart with a thin, purple, horizontal line at about 739.

The white, thick, rising, squiggly line near the bottom is the 200sma. It's currently about 721. It's rising at a rate such that it'll easily surpass 721.5 by the time price comes down to it, if price drops that far before reversing. I mention 721.5 because that's the 61.8% retracement of the green range, which is the lowest target.

Stochastics are in the bottom panel of the chart and are only barely in the oversold zone. This tells me it would not be surprising to see lower price from here.

OK, I think we hit all the elements of the chart that warrant consideration. Now I want to tie everything together. Basically, I think we're going a little lower then reversing and heading back up. Here's why:

• The large AB/CD has an expected target of 61.8% Fibonacci retracement of the green range, which is 721.5.
• The AB/CD of the Gartley pattern has an expected target of 730.5.
• There's expected support at the 78.6% Fibonacci level of the yellow range at 727.643.
• The Head & Shoulders has an expected target of 739.
• There is expected support at the 200sma, which is currently 721 and rising.

The highest of these possible bottoms of the current down leg is 739, and the lowest is 721.5. To be conservative, I want to enter a Long position at 740, which shades the 739 level by a point to account for slippage from the Bid/Ask spread and imperfect patterns.

The proper location for a Stop on the Gartley would be just under the X point, which is 687.75. However, even with the mini-wheat futures contract at $10/pt, the risk is a little too high. The risk would be 740 - 687 = 53 points * $10/pt = $530.

To reduce the risk amount, I think we can place the Stop 710. This gives us over a 10 point cushion from the lowest expected reversal point of 721.5. The amount of the risk with this Stop would be 740 - 710 = 30 * $10/pt = $300, which is a more tolerable number.

Using the Gartley pattern to determine a Target, gives us 819.65. This is .618AD, where D is the value at AB=CD, which is 730.5. We'll have to adjust the Target when we have an actual Gartley D point.

So, bottom line is, I entered a conditional order this afternoon to buy a March Wheat mini-contract (YW) with a limit of 740, Stop 710, and Target 818. (818 shades the 819.65 exact Target to account for slippage).

Risk: 740 - 710 = 30 * $10/pt = $300

Reward: 818 - 740 = 78 * $10/pt = $780

R:R = 780/300 = 2.6:1 which is excellent. Especially when considering the Gartley has about a 75% win rate.

Expecting WMT Bullish Reversal - Update 4

'Twas a good day for our bullish position. We got a larger than usual candle, based on the passed several days. And we got it on higher volume than the past 2 trading days.

We came very close to closing over the 8ema but price pulled back near the close. Still, we closed very near the high of the day, and above the 50 DMA (Daily Simple Moving Average).

Stochastics are up off the bottom now, but still quite low. So we have a long way to go before worrying about being overbought.

All of the above are bullish, but we did not make a valid candlestick pattern today. That plus the fact we couldn't close above the 8ema is a concern. But I'd say the Bulls definitely won the day. We should definitely hold our position.

I added the thick, white, angled lines to the chart to show the possible AB=CD target.

Christmas Wheat Reversing on Ag News

Agricultural reports today were bullish for wheat. By the end of the day for grain futures, 14:20 ET, I observed the forming of a Morning Star candlestick pattern and a close over the 8ema. This was on substantial volume in a general up trend. 

When looking at the chart, focus on the green annotations and the yellow Fibonacci range on the right side of the chart.

I see 3 good candidates for targets:

• Confluence of the 27.2% Fibonacci of the green range (832.59) and the 161.8% extension of the yellow range (834.5). 
• AB=CD (856.75)
• 61.8% Fibonacci extension of the green range (865.25).

Starting with the most conservative target of 832. Using a Stop just under the swing low we just made. Specifically 761.

Summary:

Entry: 780 5/8

Stop: 761

Target: 832

Risk: 761 - 780 5/8 = -19.625

Reward: 832 - 780 5/8 = 51.375

R:R = 51.375/19.625 = 1:2.6, which is great.

Short Term Short Christmas Corn - Exit

Didn't expect "Short Term" in the title to be this short. There were Agricultural Reports that came out today that referenced the grains.

Unfortunately for our trade, they came in bullish. You can see on the Daily chart above price started upward, but finally settled down under the 8ema. Technically, since we closed under the 8ema, we should have held the position. But we're also bouncing off the 20sma.

Bottom line is I lost confidence in this trade, and remembering the old adage "I'd rather be out wishing I was in, than in and wishing I was out", I just looked for the exit.

Net:

Entered: 553 1/8

Exit: 554 3/8

Loss: 553 1/8 - 554 3/8 = -1.25 * $10/pt = -$12.50

P.S. At the market close, wheat was looking strong, so I went long. See next post.

Short Term Short Christmas Corn

On the Daily chart above, of December Corn futures, I noticed the following:

• Completed AB/CD
• Bearish Harami candlestick pattern
• Bounce off Trend Line
• High Stochastics
• Close below 8ema & continuation

So, I entered a short position using the YC mini-contract at $10/point, rather than the ZC contract at $50/pt. 

Set the Target to the 61.8% Fibonacci retracement at 531 1/4. Actual Target will shade the mathematical Target by a little to account for slippage and Bid/Ask Spread.

Used a Stop just above the high of the second candle back, that also gives close to a 1:1 risk:reward ratio. A better Stop would be just above the previous swing high at 586, which is also coincident with the downward angled Trend Line (thin white line). But that would give a terrible risk:reward and I'm concerned we may get a bounce off the 20sma (green).

Summary:

Entered: 11/5/2021 14:15 ET at 553 1/8.

Stop: 573

Target: 532

Risk: 553 1/8 - 573 = 19 7/8

Reward: 553 1/8 - 532 = 21 1/8

R:R = 21.125/19.875 = 1:1.06 not great but acceptable.