Shorting Cocoa on a 1-2-3 Top Formation

Cocoa has formed a typical tight 1-2-3 top and we will be shorting cocoa futures when the price breaks below the #2 point at 2728 it hit on 12/4.  The 50% retracement is at ~2495, leaving us plenty of downside profit potential.

If you look at the Monthly Cocoa chart, cocoa prices haven’t been this high since mid-2011.

Daily Cocoa - March 2014Weekly Cocoa

Monthly Cocoa

Shorting Live Cattle Off a Wide 1-2-3 Top Formation

There is a beautifully wide 1-2-3 top forming in February Live Cattle Futures.  Notice that the #1, #2 and #3 points are weeks apart.  Also the 50% retracement level on the Weekly Chart is at 126.525, leaving lots of downside profit potential.  Markets generally move down faster than they move up, so we expect a rapid drop in Live Cattle prices if prices collapse below the #2 point at 131.25.   Since this 1-2-3 top formation is so wide, we can expect a nice drop even past the most recent major move (shown by the 50% retracement level on the Weekly Chart) and further down the next most recent move from the low of 112.225 shown the Weekly Chart.

This is a great trading opportunity shaping up.  We will watch close for prices to fall below the #2 point and then short the Live Cattle market.

Daily Live Cattle - Feb 2014Weekly Live CattleMonthly Live Cattle

New Multiyear Low in Wheat – Wait For 1-2-3 Bottom Formation

As can be seen in the Monthly and Weekly Wheat charts below, Hard Red Spring Wheat has hit a multiyear low.   We are going to wait and see if this current #1 point of a 1-2-3 bottom formation shapes up (with the formation of a #2 point) or if wheat is headed even lower.   There is huge upside potential since the 50% retracement level in the Weekly Wheat Chart is at 849.  Even on the Daily Wheat Chart, the 50% retracement (from its current low) is 721.25 which gives us plenty of upside potential on this long trade in wheat.

Daily Wheat - March2014

Monthly Wheat Weekly Wheat

Time to Go Long on Corn?

As you can see from on the charts below, Corn (CBOT) has made a multiyear low and is forming a 1-2-3 bottom formation, with a #1 point at 418.5 and a #2 point at 439.0 (the chart below is incorrectly labeled 436.75 for the #2 point – oops) with a possible #3 point at 430.25 on 12/6.

If the price of Corn on this March 2014 chart goes above the #2 point formed on 12/5, we will go long corn as it breaks above 439, with a target of the 50% retracement level at 468 based on the last high of 517.50 on 8/26/13 per the Daily Corn chart below.

Of course, the Corn market has the potential to retrace all the way to 564 based on the move from the high shown on the Weekly Corn chart of 717.50 during the week of 7/12/13.  So there is huge upside potential with this trade.

1-2-3 Bottom Formation in Corn - almost ready to trade

1-2-3 Bottom Formation in Corn – almost ready to trade

Multiyear low in Corn

Monthly Corn Chart – Multiyear low in Corn

Multiyear low in Corn
Weekly Corn Chart – Multiyear low in Corn