Copper, Wheat and Canadian Dollar with COT and Price Action

Copper, Wheat and Canadian Dollar with COT and Price Action

COPPER

Let's start with a review of some opportunities mentioned in the last week's blog post.

Copper analysis

As discussed, following the two 1xT shape daily bars Copper went up but could not break above the previous high (2.9930). Instead, it made a fulcrum point and a lower short-term high. Breaking the fulcrum point is necessary for the downswing. Such a breakout would be a good place to judge is there enough distribution. Especially when we are getting closer to a seasonal period showing weakness.

The fulcrum point here is not "the perfect one" which might mean that the current range might continue.

From a price action perspective, the last day is 2xN which suggests up day for Monday, unless Friday's low is penetrated. In this case, with more than 75%, the first day of the week will be down.


WHEAT

The possibility of a decline in Wheat was discussed last week and it went down taking out the last bottom. Now I think we are getting closer to the conclusion of this setup.

Wheat analysis

Breaking below the last bottom creates a good fulcrum point (better than the one in Copper). The market is approaching the seasonal weakness period and the only thing we are missing is a lower short-term high.

Some rules which suggest that this lower short-term high must be a complex one, i.e. giving a complex signal. That's what I'll be looking for.

CANADIAN DOLLAR

A short-term COT setup appeared in Canadian Dollar futures. It speaks of a possible decline in the Canadian currency. Take a look at the next chart.

Canadian Dollar analysis

This COT pattern appears when the currency has almost reached the previous top (06/10/20) and the resistance level in play. This is also when the seasonal chart (blue line) turns to the downside.

But, there are two problems. The first is that the signs of distribution are not that strong. The second one is that the CAD is making higher short-term lows. That means we have an uptrend in place and shorting here will be against the current dominant move.

Three problems! Because this level is most likely spotted by the majority of retail (technicians) traders. They will sell based on the strong resistance and the deceptive 'good risk-reward' opportunity.

All things considered, I'll look for complex short signals preferably after a stop-loss hunting has taken place. That will solve some of the problems mentioned above :)

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: Copper, Wheat, Canadian Dollar Price Action Trading, Talking Chart Book

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