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.

March Bear Corn - Exit

March Corn Daily 2/8/22

Sunday evening 2/6/22 10:55pm ET I Tweeted:

March Corn Daily 2/6/22

"Its Sunday night and we gapped up at the Open, then started drifting down. I believe the most likely action from here is for March Corn Futures to fill the gap and reverse back up. Therefore, I entered a limit buy order at break even, which is 622. The previous Close was 620 1/2, so we should hit 622 on the way. In case price doesn't come down to 622, I also entered a Stop at 630 just over the current high."

As you can see on the top chart, from today, price did continue downward as I said, but it didn't come down as far as I thought it would. So it hit the 630 Stop.

A "Doji Gap Up" 2-candle pattern is very Bullish. So, rather than hold on and see if it just does a small retrace upward and come back down, it seemed much wiser to exit and wait to see what happens.

This strong change in sentiment was quite a surprise when I saw it, but not surprising in the bigger picture. It's happened to me before and will most likely happen again. It's just a part of trading. Anything can happen and we have to be prepared to deal with it when it does.

Summary:

Entry: 622 1/4

Exit: 630 1/8

Loss: 622 1/4 - 630 1/8 = -7.875 * $10/pt = -$78.75

March Bear Corn - Update 2

On today's Daily chart above, you can see we formed a Bullish Harami candlestick pattern. This is concerning for our short trade, but we closed below the 8ema and Stochastics are still in the mid-range. 

We made a lower high, but also made a higher low. It's possible we just go sideways until the WASDE report next Wednesday. It's also possible we're in the process of bouncing off support from the swing high on 12/28/2021.

So, while not a confident decision, I decided to hold the position based on all the bearish indications that got us into this trade plus the fact we closed below the 8ema.

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.

Ag Reports Cut the Corn - Exit

In my original post for this thread, I wrote "Triangles are notoriously unreliable, in that the price can break out one way and quickly reverse and break out to the opposite side." Well, here's a @#$%^&*! example.

We had bounced off the 50sma on the Daily chart above and formed a Bullish Harami candlestick pattern. Next day we closed over the 8ema, then today we continued up, violated both of the Triangle Trend Lines, and hit our Stop at 612. Total change of the investor sentiment compared to what we saw in response to the major USDA report released 1/12/2022.

Can't expect to win them all. That's why, no matter how good you feel about a setup, you need to use position sizing such that your Stop won't cost you too much. We should place our Stop where it belongs, then protect ourselves by adjusting the position size accordingly. 

Summary:

Entry: 587 3/4

Exit: 612 1/2

Net:  587.75 - 612.5 = -24.75 * $10/pt = -$247.50

Ag Reports Cut the Corn - Update 2

Today's candle is even worse than yesterday's. We started with a gap down Open last night, which was very encouraging. But we ended the day closing over the 8ema, which can be considered confirmation for yesterday's Bullish Harami candlestick pattern. Not good.

However, we stayed under the 20sma and the downward angled Trend Line, as well as the upward angled Trend Line of the Triangle that we had broken through. Volume is the same as yesterday and Stochastics have been in the mid-range for about 15 candles. So no helpful insights there.

Should we stay, or should we go? Since its not unusual to reverse and retest a support area or Trend Line after breaking though it, and today is only Tuesday, and I don't see any significant grains reports through next Monday, and we have a hard Stop in place above us (612) for protection, I decided to hold on another day. Normally, a continued move above today's high would give enough confirmation to exit a short trade, but I think its reasonable to allow it, up to where we'd test the downward Trend Line. If we look like we're going to close over that, then we should get out.

I checked Wheat and Soybeans. Wheat made a very Bullish move today, while Soybeans look so weak, I took a short position. So we didn't get a clear signal on the grains to help with our decision.

Ag Reports Cut the Corn - Update 1

Certainly not what we wanted to see nor what I expected. Technically we bounced off the 50sma and formed a Bullish Harami candlestick pattern. These are Bullish indications.

However, we didn't breach the 8ema and we had somewhat lower volume today. Perhaps the big traders took today off to get a 4 day weekend. Also, its natural to have some profit taking after a strong move and before a 3 day weekend. Its also natural to test the underside of a Trend Line you broke through. We didn't get up as far as the Trend Line but we did make a move towards it.

Emotionally, I definitely wanted to exit this trade today and not take the risk of a big gap up after 3 days of no access to the market. However, I exercised my discipline and decided it was worth the risk to allow a counter-move. Using the mini-contract helped mitigate the fear of being out of control over my risk.

It also helped a lot not closing over the 8ema.

Bottom line, I held our Bearish position.

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.

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.

Dec Corn Gap Fill Rejection - Exit

Last night at 20:00 ET, when the grains market opened for the new day, price gapped up. You can see this on the top chart above, which is a 15 minute chart. The bottom chart is a daily chart. Both were saved after the end of the day.

A gap up is usually a bullish indication. But you can see after the first 15 minute candle, price started heading downward. So I held the short position, made sure the Stop and Profit Taking orders were working, and let the market work while I slept.

Next morning I saw price had reversed and was heading up. I decided to wait for the 9:30 ET market open and see what happens. As you can see the market surged upward and surpassed the previous swing high. This looked ominous after having gapped up at 20:00 last night.

So, given this was a higher risk trade, as I mentioned in the original post for this thread, deciding to exit the trade seemed like the best course of action. Covered the short at 9:39 558 1/4.

On the daily chart you can see we came back down and closed under the 8ema, and also under the 3ema. But today's candle has a higher high and a higher low compared to yesterday. I considered re-entering the short trade, but after today's price action, I think the best action is no action. Not the best idea to trade inside a consolidation anyway. Going to monitor the situation but move on to higher probability setups.

Summary:

YC Dec futures

Shorted: 544 1/4

Covered: 558 1/4

Loss: 544 1/4 - 558 1/4 = -14 * $10/pt = $-140