Futures Outlook: Counter Trend Capabilities? …and Something to Watch for a Long Term Potential Break (Video)

Lindsay Hall |

Futures Outlook: Counter Trend Capabilities? …and Something to Watch for a Long Term Potential BreakFutures Outlook for the Week: 02/4/13

This week we are going to cover three C’s: Cocoa, Coffee, and Copper.  The first two may be in the market for some counter trend plays and the last of them should be watched for a greater potential break that could lead to long-term play capabilities.

Cocoa

The first “C” is going to be Cocoa.  Cocoa has been coming up for the last few days, so initially this week; you might look for a little retracement which could coincide with the larger overall trend to the downside.  The potential in Cocoa will be dependent upon the action we see on the daily chart.

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Notice how you have a bit of a descending channel on the daily chart.  If you look at it closely, it hasn’t respected the channel in a very clean fashion, but the overall trend has definitely been to the downside.  What I will be watching on this chart, since we have seen a number of days now moving upward, is whether or not we make a run at higher boundaries on this channel.  We may very easily move lower at the beginning of the week.  If this happens first, then I will be watching to see whether or not it can defeat the most recent lows.  If we begin a new cycle of higher lows then I am looking for a break of this descending channel and the potential to create a counter trend move that could potentially give you multiple plays over the next number of weeks.

futures outlook for the week, futures outlook commodities, trading futures commodities, trading cocoa futures, trading coffee futures, trading copper futures, trading cocoa options, trading copper options, trading coffee options(Click to Enlarge)

The potential to reverse the trend on the Daily chart might also provide the opportunity to use support from the Weekly chart and reverse the trend there as well.  We would need to really see a new trend develop well on the Daily chart to the upward side in order to impact the Weekly chart, but the capability does exist here over the next few weeks.  Keep watch on the Daily chart and keep tight reigns on any counter trend trades as they are just that.

Coffee

Coffee is the other “Soft” that I will write about today that may give you the same type of counter trend potential play.  Let’s look at the charts on Coffee.

futures outlook for the week, futures outlook commodities, trading futures commodities, trading cocoa futures, trading coffee futures, trading copper futures, trading cocoa options, trading copper options, trading coffee options(Click to Enlarge)

Coffee is a little different than Cocoa in that it hasn’t cycled up for multiple days in a row.  Therefore, we may not need to watch for a small pullback to the downside at the beginning of the week like we might expect from Cocoa.  We do want to watch to be sure that 145.00 continues to hold as an area of support in the near term.  Look for new bullish opportunities, but realize that a large psychological level looms around the corner at 150.00.  Also note that Coffee has been pushed downward by pressure as it neared 160.00 in the last month.  Should we see new bullish moment come into the marketplace on the daily charts, these are areas to consider at all times.  If we end up with enough bullish pressure to break the 160 level in the next few weeks, then we might end up with a new overall trend in Coffee.

Copper


There is always a need for focus on the metals, but often it is Silver and Gold that grab everyone’s attention.  Today, I want you to focus on Copper.

futures outlook for the week, futures outlook commodities, trading futures commodities, trading cocoa futures, trading coffee futures, trading copper futures, trading cocoa options, trading copper options, trading coffee options(Click to Enlarge)

We have seen a nice bullish trend cycling upward on the Daily chart and it may be a little tired at the beginning of the week, so let it pull back a little if it needs to do so.  Keep a close eye on it though as it is increasing that upward pressure on resistance levels.

futures outlook for the week, futures outlook commodities, trading futures commodities, trading cocoa futures, trading coffee futures, trading copper futures, trading cocoa options, trading copper options, trading coffee options(Click to Enlarge)

The Weekly chart is even more intriguing.  We are building a nice triangular pattern on this one and the tighter the range becomes; the closer we are to finding an explosive move.

futures outlook for the week, futures outlook commodities, trading futures commodities, trading cocoa futures, trading coffee futures, trading copper futures, trading cocoa options, trading copper options, trading coffee options(Click to Enlarge)

Finally, when looking at the Monthly chart on Copper, as this has a great deal of potential for a large long term break, I want you to watch the slightly irregular pennant formation.  This slightly odd shaped pennant has a bullish nature.  If we find enough pressure to break this formation to the long side then we might also have enough momentum to truly break major resistance levels.  Watch the 4.0000 level first, followed by the 4.2/4.2500 territory and then the ballpark of 4.6000.  There are opportunities on the way up of course through all of these levels, but the largest opportunity may arise if we can break the 4.6000 level well.  Evaluate shorter term bullish opportunities until we can establish a nice break in these patterns and at that time we might be able to evaluate truly long term potential that could last for months.

In the world that lives through Commodities and Futures daily, these markets are much more than what you need to survive. They are what you can utilize to thrive.

For more information or for daily assistance with the Options market on Commodities and Futures, visit www.rmbgroup.com or click here to get started todayRead disclaimers here. 

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

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