Soybean Meal Bullish Reversal - Exit

 

When price got to within 2 points of the target, I zoomed in to the 10 minute chart to micro-manage the exit. We got in at 301 and the adjusted target was 310.90. So 2 points from the target is 308.90 which is 7.90/9.90=80% of the desired move. At that point its not a good trade to risk 80% to get the last 20%. 

However, there's a better idea than to just exit at 80% to your goal. What I like to do is trail a stop loss just under the low of the previously closed candle on the 10 minute chart. You can see the 309.20 Stop just under the low of the previous candle on the 10 minute chart above, which was saved at about 12:52pm ET. I sent a Tweet announcing the new 309.20 Stop Loss level.

Price continued to rise and I continued to trail the Stop up after each candle closed to 1 tick under the candle low. Eventually the Stop was hit at 309.60 approximately 13:15 ET. I sent a Tweet when the Stop was hit. Here's that image:

Here's how the day ended on the Daily chart:

You can see the little line that marked my last Stop Loss level. I did give up a few more ticks but I also avoided a possible down draft at the close, and also avoided holding over the weekend because we never actually hit the full 310.90 target. The high of the day was 310.70. Only 2 ticks from the target! I'll be patting myself on the back if we go down from here starting next week.

In summary:

(8/28/20 Exit 309.60) - (8/25/20 Entry 301) = 8.60 * $100/pt = $860 profit.

Beautiful win for a Friday afternoon.

Soybean Meal Bullish Reversal - Update 3

 

I took a look at the Weekly chart and found the 50% retracement of the range of this whole contract is (336.90-286.20)/2=311.55. This is very close to our 1st target, which is the 27.2% Fib extension of the Yellow range on the Daily chart, which is 311.12.

So, as I mentioned in yesterday's post, Stochastics will very likely be in the overbought range on the Daily if we continue up and given the calculation above, I moved the 1st target to 310.90, which is about 2 ticks below the 27.2% target.

Also, it is possible we could hit that target today, and it would be nice to avoid the risk of holding over the  weekend. It looks like a stretch to hit that target today but look at 8/13/20. That day had a candle 300.40-290=10.40 points. It's only 7:30am ET but so far today's low is 302. 302+10.40=312.40, which is higher than our 310.90 target.

Soybean Meal Bullish Reversal - Update 2

 

Dec Soy Meal struggled at the 200sma since the 9:30am ET open. I was very tempted to exit the trade. The last 2 times we tangled with the 200sma, around Aug 18th and July 6th, price rejected off it significantly. So of course I suffered all day from the yet unrealized regret of leaving the trade on, only to find a huge down draft overnight tonight. But I stayed strong and held on for the expected greater target.

However, it looks like Stochastics will probably be overbought by the time we hit the 27.2% Fib extension of the yellow range. So I'll probably lower the target to that level from the 61.8% level, then look for a pull back to get back in.

Soybean Meal Bullish Reversal - Update 1

 

Looking at the bottom wick of today's candle, you can see we were taking a little heat. For a time, price was below the 8ema and on its way into the gap from 8/24/20. But around 13:30 ET price made a low and started back up. Then at 14:10 it made a nice upward move.

We closed above the 8ema and the 3ema, and above the old Head & Shoulders neckline. So even though I was prepared for a bit to exit this trade, I had to leave it on since there was no real signal we had a change in trend.

Plus, in sympathy, Dec Soybean Futures are looking quite strong. Actually we have a long position in Dec beans. We entered the same time as the meal trade but the setups were so similar I decided to just blog about the meal trade. Here's the Dec Soybeans Futures chart:

Soybean Meal Bullish Reversal

 

Dec Soybean Meal futures bounced off the 50sma, 34ema, 20sma, TL's, and 50% Fib of the yellow range and it bounced with a gap up after a Doji candle yesterday. Stochastics not yet overbought. This is such a bullish setup that I got in early. Early meaning before we closed over the 8ema and above the previous swing high at 305.80.

Targeting the 61.8% Fibonacci Extension of Yellow Range, which is just over the AB/CD projection. If we look overbought on the Stochastics when we reach the 27.2% Fib Extension I may exit at that earlier target expecting a retracement from there, and maybe get back in later to hit the 61.8% Fib target.

Placed the stop just below the swing low.

Summary:

Entry 301.00 at 8:42am ET.

Target 317.50

Stop 295

Risk 301 - 295 = 6 * $100/pt = $600.

Reward 317.50 - 301 = 16.50 * $100/pt = $1,650.

R:R 2.75:1

A Soy Meal for the Bear - Exit

At 12:16pm ET I sent a Tweet from @JMSTweets regarding changing our target to 298.60, which was quickly hit 12:30pm. I reset the target because I noticed the 38.2% Fib retracement of the yellow range and the purple Head & Shoulders Neckline converge exactly on today's date and price was heading straight for it and quickly. There are also 2 trend lines forming the apex of a triangle followed by several moving averages close to the original target and might keep us from getting through them to hit the target. It seemed likely we could bounce off that as a support level. Plus its a Friday, and avoiding the risk of 2 days with the market closed is attractive. But I was surprised how quickly it was hit.

You'll notice price closed at 297.10, right between the new target and the original target.

I still think its likely we'll continue down to the original target of 296 at the 50% retracement of the yellow range, and maybe even the 61.8% level at 293.70. There's plenty of runway on the Stochastics. But there are so many sources of support just above the 50% level, we might not make it.

Bottom line is, it's a win:

Entry 301.20

Exit 298.60

301.20 - 298.60 = 2.6 * $100/pt = $260 profit in 5.25 hours. 

Here's the chart at the 14:20 ET market close:

A Soy Meal for the Bear

 

Here's why Dec Soy Meal looks bearish to me:

Hit 78.6% Fib of the Green Range

Bouncing off 200 SMA

Bear Harami

Doji Sandwich

Shorted from 301.20 this morning 7:15am ET

Target 50% Fib of Yellow Range 296.10

Stop 303.60 just above previous candle high

Risk: 301.20 - 303.60 = 2.40

Reward: 301.20 - 296.10 = 5.10

R:R = 2.125:1

Dec Soybean Meal Feels Good Going Down

Dec Soybean Meal Futures has been forming a wedge (or triangle) beginning June 30th on the daily chart. See the thin white trend lines with an apex converging on about 297. While doing so, it also formed a Head and Shoulders pattern. See the purple thick lines.

Today it broke the wedge trend line, and the head and shoulders neckline, to the down side. At 12:36pm ET today I Tweeted:

"Shorted Dec Soybean Meal today 10:02am ET from 292.80 with 286 target. Details coming after the close."

Here are the indications I saw:

• Evening Star candlestick pattern completed 8/3/20.
• Close below 8ema & 50sma 8/3/20, followed by a gap down and confirmation today.
• Wedge Breakout to the downside.
• Head & Shoulder Neckline Breakout to the downside.
• New swing low below 7/15/20 low.
• Stochastics not yet oversold.

The 1st Target is a beautiful confluence near 286:

• 27.2% Fibonacci extension of the yellow range (285.75).
• AB/CD (see thick white downward angled lines of equal length) ending at about 285.50.
• Trend Line (see thin white downward angled line passing through the other targets.
• Half the Head and Shoulders projected move. See thin purple horizontal line crossing through the measured move at about 284.80.

We used a stop loss of 295.20, just over today's high.

Risk: Entry - Stop = 292.80 - 295.20 = 2.4 * $100/pt = -$240 loss.

Reward: Entry - Target = 292.80 - 286 = 6.8 * $100/pt = $680 profit.

R:R = 680/240 = 2.8:1 which is great.