Short-term Cot Patterns in Wheat and Copper. Staying Bullish on S&P500

Short-term Cot Patterns in Wheat and Copper. Staying Bullish on S&P500


The latest Commitments of Traders data shows that there is a short-term COT setup in Copper. After seeing this I went on to check for something else and guess what, this was not the only thing that is pointing to the downside.

The short-term COT pattern is combined with a swing-term pattern with record Commercials' selling.

Copper analysis 07/20/2020-07/24/2020

Not only this but as you can see from the picture above Copper is approaching a seasonally weak period (blue line, red arrow). Cycles (blue arc) are also turning negative around the end of August, beginning of September.

But is this the right moment to sell? Check the next chart.

Copper closer look

As you can see, selling now would mean going against a roaring bull trend. That is not a good idea. Also, there is a good accumulation (or at least no strong signs of distribution) shown by On Balance Volume (green line). The last two days are of 1xT type which once again suggests that the immediate move should be to the upside.

But after that move, on a lower short-term high, I'll be looking for sell signals.


The signal discussed in this post led to a good move up but is it over?

Judging by the appearance of a short-term COT down pattern it might well be over. Also Wheat enter into a seasonal period when declines usually happen. 

Wheat analysis 07/20/20 - 07/24/20

But as with Copper, Wheat doesn't look ready for the short yet.

The most important is that selling now would mean going against a strong trend. OBV is not giving a clear signal for distribution. And the last bar is of EQ type which according to the Talking Chart book means that in around 80% of the time we can expect a move in the opposite direction on Monday.

Again here the best is to wait for a complex sell on a lower short-term high.

US Stock Market

Now to the stock market. Nasdaq lost the first place as being the strongest in the short-term. The strongest now is S&P500, where we have two inside days. The last of those is of 2xN shape

S&P500 analysis 07/20/20-07/24/20

you can see from the chart the seasonal and cycles are also suggesting up move.

I still favour the bullish side and am ready to take buy signals (preferable on the break above the double inside).

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, Charts made with TradeStation®.

TAGS: S&P500, SPY, SPX, COT, Commitments of Traders, Copper, Cycles, Wheat, Price Action Trading, Talking Chart, Seasonal Charts

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