Copper Futures
Copper futures in the December contract is currently trading at 315.40 after settling last Friday in New York at 317.70 a pound up over 200 points, continuing it's bullish momentum as prices are right near a 3 year high.
Fundamentally speaking, this commodity has everything going for it due to extremely strong demand because of the housing market, which continues its torrid pace. I don't think this situation will change anytime soon as I see no reason to be short copper. If you are long a futures contract, I would place the stop-loss under the 10-day low, which stands at 3.0285, as an exit strategy. However, the monetary risk will also be reduced in next week's trade as the chart structure will continue to improve.
Copper prices are trading far above their 20 and 100-day moving average. This is the strongest member of the precious metal sector. I still think there's significant room to run to the upside as I will be looking at a possible price pullback before entering into a bullish position.
TREND: HIGHER
CHART STRUCTURE: IMPROVING
VOLATILITY: HIGH
Silver Futures
Silver futures in the December contract settled last Friday in New York at 25.66 an ounce while currently trading at 24.82 down about $0.85 for the trading week, experiencing tremendous price swings daily as the volatility is extremely high.
I'm sitting on the sidelines as I have a bullish gold recommendation while keeping a close eye on silver. If we close above the critical 25.71 level, I will be recommending a bullish trade.
Silver prices are trading right at their 20 and 100-day moving average as we continually trade in a consolidation pattern over the last 2 months, looking to break out to the upside, in my opinion. I still do not believe the $30 level will be the high in silver. Fundamentally speaking, a worsening pandemic may force countries to impose tighter lockdowns to slow the spread of the virus, which will undercut economic growth and may prompt the world's central banks to expand their stimulus measures.
Remember, when you trade the commodity markets, make sure that you place the proper amount of contracts while risking 2% of your account balance on any given trade.
TREND: MIXED - HIGHER
CHART STRUCTURE: IMPROVING
VOLATILITY: HIGH
Gold Futures
Gold futures in the December contract settled last Friday in New York at 1,951 an ounce while currently trading at 1,892 down about $60 for the trading week, bouncing off the critical 1,850 level on multiple occasions.
I have been recommending a bullish position from around the 1,945 level, and if it took that trade, continue to place the stop loss on a closing basis only at 1,850 as an exit strategy as I remain bullish. The Coronavirus vaccine will start to be distributed in a relatively short manner. However, the Coronavirus is accelerating, and that is why you saw gold pick up a bit in today's action.
Gold prices are trading slightly below their 20 and 100-day moving average as the trend is mixed, and volatility certainly will remain high as we witnessed a $100 down day earlier in the trading week as the volatility is not going to settle down anytime soon.
At present, this is my only precious metal recommendation as I'm keeping a close eye on silver, which is up about 50 cents today as I still think gold prices will continue their long-term bullish trend. Congress is still mulling over the next stimulus package. If that could come to fruition, that would be another fundamental bullish factor towards higher prices as that situation continues to flip flop daily.
TREND: HIGHER
CHART STRUCTURE: SOLID
VOLATILITY: HIGH
Orange Juice Futures
Orange juice futures in the January contract settled last Friday in New York at 114.80 while currently trading at 119.80, up about 500 points for the trading week.
I have been recommending a bullish trade from around the 119.00 level, which was executed Thursday. If you took that trade, continue to place the stop loss under the spike bottom created on Oct 21 at 107.35 as an exit strategy. The chart structure will start to improve in next week's trade; therefore, the risk will also be reduced.
Juice prices are trading above their 20-day but slightly below their 100-day, which stands at 120. It looks to me that a bottom has finally been formed in this commodity. We are now entering into the extremely volatile winter season. The volatility will expand to the upside, especially if any type of frost situation develops in the State of Florida, therefore, decimating the orange juice crop as that situation has occurred on multiple occasions historically speaking.
I also have bullish recommendations in sugar and coffee. I think the agricultural markets in 2021 will continue to be strong so stay long as I believe the risk/reward is in your favor as the downside is limited.
TREND: HIGHER - MIXED
CHART STRUCTURE: EXCELLENT
VOLATILITY: AVERAGE
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Coffee Futures
Coffee futures in the March contract settled last Friday in New York at 109.45 while currently trading at 113.00, up over 350 points for the week as prices have now hit a 4 week high.
I have been recommending a bullish position over the last month or so initially in the December contract from around the 109.55 level. If you took that trade, we had a rollover into the March contract while now placing the stop loss under the Jun 15 low of 99.05 as an exit strategy. Fundamentally speaking, support on recent dryness in Brazil's coffee-growing regions. On Monday, data from Somar Meteorologia showed rain in Minas Gerais, Brazil's largest arabica coffee-growing region, measured 8.2 mm last week, or only 19% of the historical average. Coffee growing areas of Minas Gerais have faced above-average temperatures and a lack of significant rain in the past five months, which has depleted soil moisture levels and water resources for irrigation. The U.S. Climate Prediction Center on Sep 24 said a La Nina weather pattern has emerged in the Pacific Ocean, leading to below-average precipitation in Brazil.
Coffee prices are trading above their 20-day moving average but slightly below their 100-day standing at the 114 level, and if that is breached, I would have to think there would buy stops at that critical level, therefore, pushing prices even higher, so stay long.
TREND: HIGHER
CHART STRUCTURE: IMPROVING
VOLATILITY: HIGH
Sugar Futures
Sugar futures in the March contract settled last Friday in New York at 14.91 a pound while currently trading at 15.00 up slightly for the trading week, continuing its bullish momentum.
I have been recommending a bullish trade from around the 14.65 level, and if you took that trade, continue to place the stop loss at the spike bottom, which stands around 13.98 on a closing basis only as an exit strategy. For the bullish momentum to continue, prices have to break the November 3rd high of 15.23 in my opinion as I think that could happen in next week's trade as there is still significant room to run as I see no reason to be short.
I also have bullish recommendations in coffee and orange juice, as I believe the whole sector will continue to move higher, especially if adverse weather conditions persist. Fundamentally speaking, prices have inched higher over the past 6 weeks, with N.Y. sugar climbing to an 8-1/2 month high last Tuesday and London sugar rising to a new 8-1/2 month high Thursday on concerns that Brazil's dry conditions may curb sugarcane yields and reduce Brazil's sugar production. Irregular rain in Brazil's sugar-growing areas is keeping soil moisture levels below normal. Maxar recently said that Brazil's sugar-growing regions had received only 5%-25% of average rain in the past few months. Sugar prices are still trading above their 20 and 100-day moving average as this trend remains strong as I will be looking at possibly adding more contracts to the upside as risk/reward remains in your favor.
TREND: HIGHER
CHART STRUCTURE: IMPROVING
VOLATILITY: AVERAGE
Soybean Meal Futures
Soybean meal futures in the December contract settled last Friday in Chicago at 382 while currently trading at 388, up about 600 points for the week, continuing its bullish momentum as this trend has been remarkable over the last couple of months to the upside. I have been recommending a bullish position from the 299 level as the breakout occurred back in August, and if you took that trade, continue to place the stop loss at the 10-day low on a hard basis only at 374. However, the chart structure will improve daily starting next week; therefore, the monetary risk will be lowered. Soybean meal prices are trading far above their 20 and 100-day moving average as this trend is very strong to the upside. Demand from China continues to push prices higher, coupled with the fact that the U.S. soybean crop in 2020 was disappointed at best so stay long as the risk/reward remains in your favor.
TREND: HIGHER
CHART STRUCTURE: IMPROVING
VOLATILITY: AVERAGE
What do I mean when I talk about chart structure and why do I think it’s so important when deciding to enter or exit a trade? I define chart structure as a slow grinding up or down trend with low volatility and no chart gaps. Many of the great trends that develop have very good chart structure with many low percentage daily moves over a course of at least 4 weeks thus allowing you to enter a market allowing you to place a stop loss relatively close due to small moves thus reducing risk. Charts that have violent up and down swings are not considered to have solid chart structure as I like to place my stops at 10-day highs or 10-day lows and if the charts have a tight pattern that will allow the trader to minimize risk which is what trading is all about and if the chart has big swings your stop will be further away allowing the possibility of larger monetary loss.
If you are looking for a futures broker feel free to contact Michael Seery at 630-408-3325 and he will be more than happy to help you with your trading or visit www.seeryfutures.com
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