XLE Re-entry - Update 1

XLE Daily

Looking good today! After bobbling between the downward Trend Line and the 50 SMA for a few days, we gapped up at the Open above the 50 SMA and stayed above it all day. We had decent volume, decent size green candle, and looks like we got a Bollinger Band/Keltner Channel squeeze breakout to the upside. We closed above all Moving Averages and closer to the top of the candle than the bottom. All this is bullish.

Unfortunately, we also entered a previous congestion area to the left, and Stochastics are now in the overbought area. We closed a little stretched above the 3 ema and 8 ema. These provide bearish pressures. It would be reasonable to have a pull back and retest the downward Trend Line.

Strangely, while our energy ETF is looking bullish, the Feb. crude oil futures has a bearish setup. I tweeted 15:47 ET today "Oil Futures Mar 4hr showing tweezer top near 78.6% Fib and a Gartley D point.". Initially, this seems like a contradiction, but we're dealing with apples and oranges. The XLE is an ETF constructed by equities, and the CL futures is the actual crude oil commodity itself. So, its perfectly reasonable that these two will sometimes diverge.

CL Mar Oil Futures 4hr Chart

I decided to hold the XLE long position since it appears the bullish indications beat the bearish ones, and we have now resumed the general upward trend.

(We also shorted the March oil futures, but that's a different trade.)

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 - Update 2

ZIM 6/10/22 Daily Chart

Yesterday's post included "it seems very likely we'll get a higher than expected inflation number. If we do, then that puts more pressure on the Federal Reserve to increase short term interest rates higher and faster. That should be very bearish for the market.". That's exactly what happened. I didn't watch our Put value continuously, but I did notice our profit got as high as $350. It may have been even higher.

Soon as the CPI Report came out at 8:30am ET this morning and the equity futures started tanking, I knew we didn't need our June 60 Call hedge anymore, but the option market didn't open until 9:30. So I entered a limit order to sell the option for at least $10. At 8:56am ET I sent this Tweet:

"CPI report was worse inflation than expected, as we predicted. ZIM should drop more. Entered order to sell the hedge for at least .10"

When the market opened at 9:30 our June 60 Call sold for .48, so we only lost .60 - .48 = .12 x 100 shares = -$12. Cheap insurance to protect our $590 position.

Near the Close, I had to make a decision. The voice in my head was insisting I sell and capture the profits while I can. I don't want to hold over the weekend and wake up Monday to a loss because ZIM announced they're being acquired (just made that up), or some other bullish news. What to do?

Today we formed a Doji candle below yesterday's low but near it. If, on Monday, we gap up a little at the Open and make a significant green candle, then we'd form a 3 candle pattern called a Morning Star. And since Stochastics are now oversold, this pattern would be very bullish. And volume has diminished. 

Also, we're sitting right on the 50% Fibonacci level. It would be normal for this level to provide support. However, if you look left, you'll see we already bounced off the 50% Fib on 4/25/22. Price could certainly bounce again, but often once you've paid your respects to a support level you don't need to pay tribute again.

All of the points above give credence to the greedy, paranoid voice in my head saying "sell, sell, sell!". However, this is still a bearish setup in a bear market. Chances are we will continue down on Monday. But maybe it would be a good idea to take something off the table. I thought about a good way to do that and came up with this: Roll down the option. Here's how I did that:

I sold our July 55 Put for 5.90. This captured 5.90 - 3.20 = 2.70 x 100 shares = $270 in profit.

Then I bought a July 40 Put for .98 x 100 shares = $98.00. If we lose that whole option, then we'll still have $270 - 98 = $172 in profits. So we "rolled down" the option strikes in our position from 55 to 40, and thereby captured some good profit but stayed short to benefit from any further drop in the ZIM stock price.

Our current balance is $270 - 12 = $258 in hard money profit. Plus we have a July 40 Put worth $98.

ZIM Zooming Down - Update 1

ZIM Daily

Today we gapped down at the Open and didn't even try to fill the gap. That's very bearish. Then we made another big down candle almost as big as yesterday and with almost as much volume. 

Given that this is the day before a big economic report, tomorrow morning 8:30am ET (the month to month CPI inflation report), makes today's big move even more significant, because you often see quiet and/or mean reversion type days before a big report comes out.

In yesterday's post, I forgot to mention the candle closed near the bottom. This was another bearish indicator. Today, we did it again.

Stochastics are still in the mid-range, so we have plenty of runway to drop further.

So, we continue to have a very bearish set up. However, the CPI report tomorrow morning is a craps shoot. The market could rocket upwards in response. And this could definitely happen even though we're in a bear market. On the other hand, looking at things fundamentally, which I try not to do, it seems very likely we'll get a higher than expected inflation number. If we do, then that puts more pressure on the Federal Reserve to increase short term interest rates higher and faster. That should be very bearish for the market.

Our July 55 Put was purchased yesterday for $3.20. Today's last trade was $5.90. That means our puts have increased in value by 5.90 - 3.20 = 2.70 * 100 shares = $270 profit. I had a very strong desire to sell and capture that profit. Would that be the best course of action? It would certainly be the safest and satisfy the loud voice in my head warning I could lose it all. But how would I feel if ZIM gaps way down tomorrow? Not so good.

I decided I wanted to participate in a likely downdraft tomorrow, which I'd miss if I sold out the position. However, there's a very real chance the market could shoot up tomorrow and take ZIM with it. So it would be a good idea to take a hedge against our short position.

I Tweeted out at 3:16pm ET that I bought a June 60 Call option for $0.60. If ZIM goes up significantly tomorrow then this Call option will increase in value, offsetting our losses in the Put option. Not necessarily 100%, but it'll help. Since the news comes out at 8:30 and the option market opens at 9:30, we'll just have to wait to liquidate the position.

Of course, if ZIM takes a flying leap further down, the Call option could become worthless before I can sell it. But our gains will far outweigh the $60 loss. Can't wait to see what happens tomorrow.

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.

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

Hogs Turned Tail - Exit

Around 9:50am ET I was looking at the Daily chart at the top above and the 1 hour chart underneath. In yesterday's post I said: 

"If we form a green candle tomorrow, across from red candle from the previous day (Fri), then that would create a Morning Star candlestick pattern, which is Bullish.".

Well, that's exactly what I saw happening. In addition, you can see a Doji Gap Up candlestick pattern on the hourly chart. This is another Bullish pattern.

I needed to decide whether to get out here and minimize the loss, assuming price continued upward, or wait until the end of the day and see if we get a reversal. At 9:54am I decided the Doji Gap Up was a good reason to exit immediately, which I did.

Right after, I sent this Tweet:

"Sold the April Lean Hogs Futures Apr Put at 3.9, details later."

Turns out it was a good decision. Here's the Daily chart after the 14:05 ET Close:

Notice how we closed over the 8ema. Had I waited until the Close to make a decision, I would have exited there, for a bigger loss.

Summary:

In: 4.425

Out: 3.900

Net: 3.9000 - 4.425 = -0.525 * $400/pt = -$-210.00

Hogs Turned Tail - Update 2

Today's price action made a Doji candle on the Daily chart above, which makes me nervous. A Doji candle represents indecision. If we form a green candle tomorrow, across from red candle from the previous day (Fri), then that would create a Morning Star candlestick pattern, which is Bullish. Not good for our Bearish trade.

We also appear to be experiencing support from the 20sma, which could lead to the green candle tomorrow that we don't want to see. In addition, volume has been steadily decreasing, which is not encouraging.

However, on the other hand, we did form a lower high and a lower low today, and Stochastics are not yet oversold. These are constructive to our Bearish position.

It was a harder decision today, whether to exit or not, than it was the previous trading day, which was a Friday, which is a little ironic. Meaning I'd rather leave the position at risk for 3 days, than just 1 day.

While there's a real chance we've just formed a swing bottom, I think it would be more an act of fear than playing the odds to exit today. We're still looking at a strong case for a continued down trend. It would be a mistake to get out today just because we hit some support and made a Doji. There's no real indication we'll reverse tomorrow even though we certainly could.

So, bottom line, at the end of the livestock market Close at 14:05 ET, I exercised my courage and decided to hold the position.

Hogs Turned Tail - Update 1

Now is when we should have entered this short trade. Now that we have confirmation from a continuation candle to the downside. This, of course, adds to our conviction we're in a trade with good chances for success.

We formed a lower high and a lower low, while Stochastics are still in the mid-range. These are constructive for our trade.

However, the candles are getting smaller and the volume is also getting smaller. These are not constructive. Although, today's volume bar is larger than the largest recent bullish volume bar 3 days ago. That mitigates the previous point somewhat.

We also got an assist from the Live Cattle, Corn, Soybean, and Wheat markets. They all took a nice nose dive today.

Being a Friday makes the hold, add, or exit decision a bit harder because we have more risk waiting 3 days than the usual 1 day. But the decision to hold our position at the 14:05 ET lean hog market Close was an easy one.

Golden Gartley

GC Apr 2022 4hr

Annotations for this trade are in yellow on the 4 hour April 2022 Gold Futures chart above. You can see the X,A.B, and C points of the Gartley (aka XABCD) PATTERN. The first D point I chose was surpassed by higher price action. So I changed the label from 'D' to 'D1", then added the D2 point when I thought it appeared. But this was also surpassed by the D3 point, which was today.

As you might guess, I've been in this trade for a while, but I haven't posted about it. I don't include most of my trades in the blog because either they are on a short time-frame, or high risk, or I just don't have the time. I'm including this trade now because I think D3 is the final D point for this Gartley pattern.

We had an impactful CPI report this morning, 2/10/2022 at 8:30am ET, which led to a rather dynamic day in the price action. Looking back on this 4 hour chart, you can see we formed a Bearish Engulfing candlestick pattern, with a close below the 8ema, followed by a continuation candle. This is significantly more bearish than the other D points. Plus Stochastics really took a dive.

What you can't see is how close today's high came to the Stop. Here's how I entered this trade on 2/7/22:

Entry: 1814.90

Stop: 1845.00

D3 Target: 1804.60 (the D1 and D2 targets were lower and no longer of interest)

Today's high was D3 at 1843.30, just 1.70 points from the Stop. That was just luck, and I'm very grateful to be so lucky.

The current targets are shown on the chart in yellow. The actual target for this trade is 1806.00 which shades the exact target to accommodate the Bid/Ask spread, and other slippage.

OK, now we're all caught up. Let's see what happens next in this crazy market.

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.

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 - 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

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.

March Wheat did an about-face - Exit

Very difficult decision today at the Wheat market Close.There were reasons to exit and reasons to hold.

The top chart is the Daily chart after the Close. We formed a Bullish Harami candlestick pattern and closed over the 3ema. The 3ema is like a proxy for the 8ema when price is far from the 8ema. Also, we bounced off the previous swing low from mid-December. If we get continuation in the next couple days we will most likely lose all our profit and could feasibly hit our Stop for a loss.

However, we're still under the 8ema, and should therefore hold the position and see what happens tomorrow. Stochastics are low but not very oversold. Also, The BB/KC break out to the downside is just beginning. Not to mention all the Bearish indications that got us into this trade.

So, I zoomed into the 15 minute chart, which is the 2nd chart above, to get more perspective. You can see price is up against resistance from both the 200sma and the 61.8% Fibonacci retracement level. Stochastics are significantly overbought. These suggest price is likely to reject this level and take a dive back down. But it didn't. It didn't break through to the upside either. It just got lodged between the 8ema and the resistance level. Now look at the volume. A huge spike in the last 15 minutes. Since price barely moved in that volume spike, it shows there was a big battle between the bulls and the bears. So the market couldn't decide either, and I wasn't getting any clearer message from the 15 minute chart.

What else could I do to get some insight? I looked at the other grain charts:

The upper chart is the March Corn Daily, and the lower chart is the March Soybean Daily. These looked like they were likely to continue upward for days. Look at Soybeans. It made a new high and closed near the top of the candle!

Looking at these convinced me we needed to exit our Bearish position today, capture what profits we were fortunate to still have, and monitor the March Wheat chart going forward to see if we should re-enter short.

I Tweeted at 13:57 ET:

"I may exit our Short March Wheat Futures position before the 14:20 ET Close today. Watching the 15 minute chart, which is at a critical level."

At 14:11 I Tweeted:

"I'm out of the Short March Wheat Futures position at 770. Details after the Close."

Bottom line:

Shorted: 790 12/29/21

Covered: 770 1/4/22

Profit: 20 points * $10/pt (YW mini-contract) = $200 (Full size would be 20 * $50 = $1,000)

Feb Gold May Flutter South - Exit

Wow! What a gift that was :) Price went up just a little over the 127.2% Fib Extension and established the D point of the Butterfly pattern at 1833. That yielded a Target of 1805.87, so I didn't need to change yesterday's estimated initial Target of 1806.

Then we drifted down followed by a slight pull back. Then the bottom fell out and we accelerated down to the Target and then some. In fact, we even hit the secondary Target of the .786AD Fibonacci retracement at 1798.50. The low as of 15:15 ET is 1798.20.

Summary:

Entry: 1830

Exit: 1806.50

Profit 23.5 points * $10/pt (mini-contract) = $235. The full contract, at $100/pt, would have been $2,350.

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.