Bonds, Sugar, Swiss Franc and Another Long Position in SP500

Bonds, Sugar, Swiss Franc and Another Long Position in SP500

In the past week, my short-term COT pattern appeared in many instruments. Unfortunately, in some of them, there is nothing else which can confirm the signal.

SWISS FRANC

One instrument with a short-term COT pattern is the Swiss Franc futures. Here, the setup described in Piece #M20 is suggesting a possible down move. Let's see what else is backing such a scenario.

Below is a chart of Swiss Frank with a few indicators on it.

Swiss Franc analysis 12/15/2019

The Swiss Franc is closely following the seasonal indicator (blue line, courtesy of Larry Williams). For the rest of December and the first half of January 2020, the seasonal pattern is forecasting a range. That is not something that fully supports our setup for a decline, but it is not against it either. Since we'll be looking for a short-term trade (a few days only), it can happen in such a seasonal range.

The green line is the On Balance Volume, which is weaker than the price. 

Now let's focus on the last three bars.

Wednesday's price action broke above the 1.0252 (1st of November) top and entered a resistance zone made of three tops. With the first top broken, the price went close to the second one (10/18/2019). At those levels, Wednesday's bar was accompanied by a huge volume.

After that big volume day, Thursday was a downrange, outside bar. That outside day brought a lot of selling. 

Friday's price action was the most interesting. It went up, clearing the stops above the high of the outside bar. That is visible on the 5-minute chart below. 

Swiss Franc analysis 5-minute chart 12/15/2019

In one 5-minute bar, Swiss Franc went above the prior day's high. Then unable to hold those gains it fell down. All this made Friday's high a very good point for a stop-loss. I explain this technique in Piece #M7

Monday most probably will start with a move towards Friday's high. If it fails, I will look for a short signal in the area around Friday's and Thursday's lows. Targets would be in the area around 1.0133 and 1.0080

SUGAR

A short-term COT pattern pointing for a decline appeared in Sugar futures this past week. There are some signs of distribution like the On Balance Divergence (green line) on the chart below.

Sugar analysis 12/15/2019

We have to be careful with this one because the trend is strong. We can't take just any entry signal it has to be a complex one. At the moment I don't see such one. But if I do, I am planning to take it.

30 YR. U.S. TREASURY BONDS

Another very good divergence appeared in Bonds. This time the On Balance Volume is making higher lows while the chart - lower lows. 

Bonds analysis 12/15/2019

On Thursday the market made new lows with a large range day and big volume. Then on Friday it immediately went up. Also, we have a Spearhead RSI buy pattern (learn more about it in Piece #M17).

Now the key level is Thursday's high. But if it is broken, I will not go long immediately. The last two days were with large ranges. This lowers the probability of having a third large one (especially if it is Monday). So from a price action perspective, it is better to wait for a few small range days which will make the entry more solid.

U.S. STOCK MARKET

I was fortunate enough to find a good entry point, and I am long S&P500. The market made new all-time highs very fast and currently, my stop-loss is protecting a good profit.

S&P500 real position

But can it go higher? I certainly hope so :) 

Some believe that now is the “buy the rumour, sell the news” situation. But we don't know what will be included in that “phase one” of the deal USA-China. One thing is to expect a deal, another is to expect what will be inside. We might see positive surprises there.


If Friday's low is violated, I will most probably close my position. But I think we are going higher. If Friday's high is taken out, I'll set my target at 3200, then 3250.


Now, let's find your missing piece!

Vassil Banov,
Founder of Piece of Trading



Trades mentioned here are either taken or will be taken by the author if the right conditions appear. They are NOT recommendations nor any of this constitute investment advice. Please read the Risk Disclaimer

Seasonal indicators courtesy of Larry Williams, ireallytrade.com. Charts made with TradeStation®. tradestation.com

TAGS: S&P500, SPY, SPX, COT, Commitments of Traders, Swiss Franc, CHF, Sugar, Bonds, Price Action Trading, Real Trades

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