Futures Outlook for the Week of 07/16/13
Today I would like to give a quick update on the last few ideas that I brought to you via my Futures Outlook.
Last week I was looking at Soybeans for a short term failure from around the 1600 territory where we were located as I was writing. On the weekly chart shown below, you can see that we have experienced a bit of failure in the last week, but at this time it has not been strong enough to yet break the ascending trend. This is a caution flag on any bearish position. As mentioned in last week’s article: “In the very near term, I would be looking for potential retracement down towards the 1550 territory.”
On July 2nd I wrote a piece about Gold and the potential for a bit of upswing. We have moved upwards in the last two weeks as visible in the Daily chart below, by about $40. In the article I mentioned: “On the Daily chart, you can see that Gold tested below the 1200 level and has started a rebound. The 1250 territory will be important to watch. If we cannot rest above it in a stable manner, then we may see a little bit of additional failure.” I reiterate this now as we have continued to climb above 1250, but 1250 will continue to remain important here if we see any retracement of the latest bullish move.
Great British Pound
In my commentary on the Great British Pound, I was focused mainly on longer term perspective, but I will include an update here nevertheless.
Some of the thoughts per that commentary included: “Per the Weekly chart, you can see once again the 1.50 area highlighted in bold black. In addition, I have marked an ascending channel that we have been building for the bulk of this year. Note that if we are able to find support here again after a few weeks of failure, you would have a nice bit of rally potential. If you are looking for a position that lasts for months, you would need to be a little bit attentive if you jump in bullish in nature, simply because channels at some point always break. For the near term, short term perspective, I expect a bit of a rally. The ascending channel supports that direction, but I raise a caution flag on this for the mid-term simply because this pattern is already well-built and duration without interruption could be questionable.”
(Historical Chart: 06-27-13)
Per that commentary, I did believe that we might have had a few days of rally and it tried, but failed. I also noted the potential for a few weeks of retracement should the channel break and that is what it seems we have experienced, but the failure hasn’t lasted for a few weeks. We had one week of significant selling pressure followed by a rapid price point recovery.
Here is the Weekly chart current and updated with similar markings to the original. You can see where we broke the channel’s trend and even tested below the very important psychological level of 1.50. In addition to the break, I want you to notice that we rebounded just as quickly. This highlights the importance of this territory. As the Pound tries to decide which way to go, I would be very keen on giving it a little breathing room and watching for breaks of the range between 1.52 and 1.48. As shown in the last couple of weeks, this area is within easy reach on both sides of the spectrum. In addition, it is the territory around the 1.50 which is crucial to the development of this currency’s strength or weakness.
On June 18th, I wrote on Crude Oil again, as it is something that we all should watch. I mentioned that our focus should be on the $100 mark. Per that article: “Per the Daily chart, we may be a little overextended right now, but if a bit of retracement is allowed and comes through, then Crude Oil might have an excellent chance of breaking that 100 territory. Remember though, we have been here before.”
(Historical Chart: 06-18-13)
We were allowed that bit of retracement that was necessary to form a new energy and the ability to break through the $100 mark as shown in the current Daily chart below.
In addition, my thoughts via the Weekly chart on June 18th were: “I look at it now more in the light of an ascending triangle with 100 clearly being the number to beat. A test above 100 will not be enough however, Crude Oil needs to build the energy or have an impetus to make a real run through 100.”
(Historical Chart: 06-18-13)
On the current Weekly chart, you can see where we have broken through the $100 territory now. I want you at this point though, to realize that the $110 area could be a blocker here and we have started to slow our progression. As I have said many times, the $100 area is an area that we have visited many times. Right now the question becomes, “Do we rest above it and keep moving forward?” $100 now needs to hold as an ultra-strong support level if we intend to push well in a continuing upward direction. If $100 cannot hold, then we may go right back down to being range bound between $75-$100.
Last, but not least are the Lean Hogs. On June 10th, while lean hogs were around 98 I mentioned: “However, if you are looking for near term action, then you will want to pay attention to our behavior in this market around the 100 mark, which is highlighted here by the blue dotted line. It has been a couple of years since we broke the 100 mark well. In my view, with an overextended push on the Daily and Weekly charts, a trend line that is too steep to maintain, maybe a month or so left in seasonal peak, and charts that in general need correction, this is one to watch for south side action.”
Well, the hogs made a run at 100 but were unsuccessful at a solid breach. From that point we have seen failure in this market.
This current Daily chart shows the late June push up towards 100 and the subsequent failure. At this point as we hesitate around 95, I believe that 95 needs to be watched closely. If we consolidate here and are unable to defeat 97 then you might see a failure down towards 93/92 levels. If we see failure that brings us to that region, we need to be extremely aware of the headache that could exist between 93 and down towards 88. That previous channel was a sticking point for quite a while before the price ascent and may be a rough barrier on the short side to try and contend with…stay aware.
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