Let's begin this week's analysis with Wheat where a short-term COT pattern is pointing towards a possible up move. Besides this, we have a seasonal tendency for Wheat to go up during this time of the year. Also, the price made a new low while various accumulation measures didn't. That divergence is backing up the bullish idea.
From a price action perspective, we had a tight range which was broken to the downside with a Big Long Body (BLB) bar on Friday. If the market can come back and break above the high of this BLB in the next few days I'll be looking for and taking long signals, preferably on a higher short-term low.
This week it might be worthwhile to pay attention to what Dollar index is doing. Here we have a bullish swing COT setup. The price is making higher-short term lows. We are in the right period according to the seasonal chart (blue line, courtesy of Larry Williams). And the accumulation measure (green line) is stronger than the price itself. Based on this I'll be looking for long signals.
One way to trade this is directly in the Dollar Index. The last two days are of a Long Nose type. The high of the first one is broken already. That leaves the high of Friday as a key level. But Friday's low is also a key level because if broken the market will make a lower short-term high.
Another way to play this situation is to look for another currency which might get weaker than the US Dollar.
British Pound is weaker but there is no signal at the moment. I see a significant distribution in Canadian Dollar and EURO. Canadian Dollar. EURO made an inside day on Friday which might be used a signal. A lot of small range days can be seen in the Australian dollar. A stop-loss run and then a signal might made this currency a good vehicle to play the Dollar strength.
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
Get it today!