A Lot of Small Ranges and How to Take Advantage of Them

A Lot of Small Ranges and How to Take Advantage of Them

 What a week! Negative prices for the expiring Crude Oil May Futures. This contract reached -$40.32. The current contract, June, has also dropped significantly. Some brokers restricted trading on Crude Oil products so we would not discuss energies here. 

SOYBEAN MEAL

The situation in Soybean Meal is improving. We were searching for buy signals and a higher short-term low after the last week's blog post. But that HL can happen now in an even better combination. The accumulation, the OBV is still holding. Last week there was a short-term Commitments of Traders pattern pointing to a possible rise. This pattern is still present.   

What is new is that the price action setup. This week we had a dip down below the lows an immediate return. That is a Long Tail bar which is also Big in size. The following three bars are small in size and the formation is ready to make a higher short-term low. Such low would create an intermediate low. See the chart.  

Soybean Meal analysis 04/27/2020 - 05/01/2020

The last bar was an inside one. Friday's or Thursday's high is a good level, which if broken might lead to a move towards 300. The stop should be below the highest daily low after the lowest point reached on April 21. It will be better if there is a price action catalyst on Monday. 

We saw a lot of small range days during the last week. That means we can expect the large to show up this week and that is a profit opportunity.

30 YR. T-BONDS

The first one is the 30 Yr. Treasury Bonds futures. Here is the chart.

30 Year US Treasury Bonds analysis 04/27/2020 - 05/01/2020

What you can see is that Bonds tried to break above the last top from 3rd of April. That attempt was unsuccessful because immediately after the new high was reached this instrument was distributed. That led to an outside day on the 22nd of April. 

What's interesting is that next were two consecutive small bars which are both inside the range of this outside bar. This instrument is making higher low and equal highs. The indicator is showing that accumulation is picking up. Last but not least the last bar is a Long Tail. All this gives a slight advantage to the up scenario.   

I'll be looking after the opening on Monday, will there be any price action catalyst which points to which of the shown target levels would be reached first.

CURRENCIES

CANADIAN DOLLAR

Last day was a small, down, inside Long Tail bar.

Canadian Dollar analysis 04/27/2020 - 05/01/2020

Because of Crude Oil problems, I think that the Canadian Dollar can be expected to be under pressure. I'll be looking for short signals here. With this scenario, I don't expect Thursday's high to be broken. If this happens I'll reconsider the validity of the short scenario.

AUSTRALIAN DOLLAR

Australian Dollar analysis 04/27/2020 - 05/01/2020

Here we have an inside Long Tail bar again. Again it points upwards. But this time it is different than the previous case with the Canadian Dollar. Here, we are approaching a seasonal top. Also On Balance Volume is considerably weaker than the price.

If this currency opens with a gap lower and breaks below Friday's low with No Tail that would be a stronger short signal.   

BRITISH POUND

Large day on Tuesday followed by three small ranges inside it. With so many and so small days the high and low of that large range are becoming more important. Last day is again a Long Tail which was formed after the attempt to break below the previous day was unsuccessful. That is slightly bullish but I'll be ready to take action on both sides here.

British Pound 04/27/2020 - 05/01/2020  

Gap, No Tail, Stop Hunting, a breakout of the range of the Tuesday bar will guide me into what position to take.

JAPANESE YEN

Speaking of many small range bars the king is definitely the Japanese Yen. What we have here is a strong seasonal tendency for the Japanese Yen to go up during this time of the year. No matter that the price stays in a very tight range two volume-based indicators are showing accumulation. Add to this the fact the last two daily bars are pointing upwards and it starts to make sense to expect JPY to go up. Just beware of the Larry Williams'specialist's trap here.   

Japanese Yen analysis 04/26/2020 - 05/01/2020

S&P500

Now to the messy one :) Last week I was bullish for S&P500 but Crude Oil brought some unexpected parameters into this market equation. This week the crude oil shock should be already priced in and it is reasonable to expect that S&P500 can continue up. However, the buying is not that strong as one should have expected after the supposed end of the bear market. That is why I'll be willing to take both long and short signals.   

Long signals I don't see at the moment. Maybe if Monday ends up as inside day and then on Tuesday we see up break. As for the short if on Monday we see a break below Thursday or Friday's lows that would signal weakness. 

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, British pound, Canadian Dollar, Crude Oil, Japanese Yen, Australian Dollar, Price Action Trading, Bonds, Soybean Meal

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