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The Entry - Sell Today, we will do a few case studies on how we can make a market entry, this technique can be applied both the long-term or the short-term trades. Today’s content: 1. 25 Nov 21 - Entry signal to short (transiting into today’s bear) 2. 13 Oct 22 - Entry signal to go long (for this bear rebound) 3. Today – Entry signal – Sell If you have been following, today’s is the 5th tutorial in our Trading Series: 1. “The buy strategy” 2. “The sell strategy” 3. “Developing long & short-term view” 4. “Choosing between the time frame” 5. “The entry” E-Mini Dow Jones Futures Minimum fluctuation 1 point = $5 10 points = $50 100 points = $500 Disclaimer: • What presented here is not a recommendation, please consult your licensed broker. • Our mission is to create lateral thinking skills for every investor and trader, knowing when to take a calculated risk with market uncertainty and a bolder risk when opportunity arises. CME Real-time Market Data help identify trading set-ups in real-time and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com
CBOT_MINI:YM1!Short
by konhow
5
Still Waters Run Deep - Bitcoin Set To Go Bullish?BACKGROUND Bitcoin (BTC) price has been in decline for the past year with price crashing as much as 20% on a single day in June. Still, the low set of $17,750 on 18 June (Saturday & hence unseen on CME chart) has turned out to be a resilient support level. BITCOIN PRICES RESILIENT RELATIVE TO S&P500 (SPX) and NASDAQ-100 (NDX) NDX and SPX with which BTC is generally correlated have both set new lows since June while BTC has been traded within the same range (of $18k - $20k). This again shows remarkable price resilience. Analysis from market experts points to significant deleveraging within the crypto industry and hence the perception that crypto prices might have bottomed out. SHRINKING IMPLIED VOLATILITY Thirty-day forward implied volatility is at record low. Low premiums to acquire call options to secure outsized gains from price break-out is seen on non-traditional crypto derivatives exchanges. Call-put ratio of 2.09 on Deribit points to 2.09 calls for every 1 put, underscoring the bullishness in BTC. However, call-put ratio on CME is 0.362 at the time of this writing. BULLISH ONCHAIN SIGNALS Turning our attention to on-chain analysis, we notice that Long Term Holders GLASSNODE:BTC_ACTIVE1Y (those who held BTC for at least 12 months) now represent nearly two-thirds of total BTC supply. This again points to further selling pressure being limited. BULLISH TECHNICAL INDICATORS Talking of technicals, BTC/USD is showing a falling wedge formation, suggesting the possibility of a breakout. BTC has retested its June support at DXY local maximum. As the USD is the primary base currency against which BTC is traded, the value of the Dollar strongly impacts BTC price. The DXY has been rallying all year with an unprecedented rate hiking cycle. However, the DXY has started to show a broadening ascending wedge formation, signaling the softening of rate hiking cycle. The CME FedWatch tool currently suggests three more rate hikes are likely by 22nd March 2023. Anticipation is that each of these upcoming hikes will be incrementally lower relative to the last four outsized rate rises. TRADE SET-UP CME’s Bitcoin futures for December are currently discounted relative to spot at the time of this writing, offering investors an opportunity for a long position - amid a macroeconomic backdrop which poses a significant threat to risk assets such as BTC. With that backdrop, an entry around $20,770 with a stop loss at $17.7k (the June low) might provide a compelling trade set-up. Profit could be taken at previous bear market rally highs of $22.7k and $25k delivering a risk reward ratio of 1.38 and 0.63, respectively. CASE STUDY WITH 1 LOT OF CME Micro Bitcoin Futures One lot CME Micro Bitcoin Futures provides exposure to 0.10 BTC. CME Micro Bitcoin Futures expiring January 2023 requires a maintenance margin of USD 528 per lot. Entry at $20,770 and take profit at $22,700 would result in $193 in profits with a return on capital of 36.5%. However, if the trade turns sour triggering a stop-loss at $17,700, it would lead to a loss of $307 amounting to a loss of 58%. Investors must take note that when prices plunge sharply, stop-losses might be triggered at levels way below the set levels inflating realised losses. CME Real-time Market Data help identify trading set-ups and express market views better. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com DISCLAIMER Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services. This material has been published for general education and circulation only. It does not offer or solicit to buy or sell and does not address specific investment or risk management objectives, financial situation or particular needs of any person. Advice should be sought from a financial advisor regarding the suitability of any investment or risk management product before investing or adopting any investment or hedging strategies. Past performance is not indicative of the future performance. All examples used in this workshop are hypothetical and are used for explanation purposes only. Contents in this material is not investment advice and/or may or may not be the results of actual market experience. Mint Finance does not endorse or shall not be liable for the content of information provided by third parties. Use of and/or reliance on such information is entirely at the reader’s own risk. These materials are not intended for distribution to, or for use by or to be acted on by any person or entity located in any jurisdiction where such distribution, use or action would be contrary to applicable laws or regulations or would subject Mint Finance to any registration or licensing requirement.
CME:BTC1!Long
by mintdotfinance
Is the Santa Claus rally real?As we approach Christmas, for yet another year, we wonder if Santa is real, or rather if the Santa Claus Rally is real. Some hypotheses about the Santa Claus rally include the lowered Institutional liquidity as traders go on holiday (just like us, soon!). That leaves the retail crowd, proven to be bullish on just about anything, pushing markets higher. There have been many studies on this effect on the US markets with results ranging from slightly better than a coinflip chance to none at all. We thought to experiment with this idea and look at the same effect but on another market instead. With the massive benefit of hindsight, a simple, buy the Nikkei 225 in the middle of December and sell at the high/low before March comes around strategy, giving a win rate of 70% and an average win return of 10.3%, while the average loss was -11.3%. Interesting, but nothing much better than a coin toss with some variance. Now as a Trader, we always try to position ourselves in highly expected value situations and find a unique edge where others might not look. In this instance, how we can re-position ourselves is perhaps by looking at the spread between the US Index against the Japanese Index, before trying to identify the seasonal factor (Santa Claus Rally). But before we go further, it’s often good to think about how or why this trade might just work out: 1) Holiday impact – generally the Christmas holiday holds greater cultural importance in the US, hence it is likely that more will be on holiday in the US during this season. 2) Diverging monetary policies - The Bank of Japan remains one of the last central banks which stick to its negative interest rate policy (NIRP) even as inflation creeps higher. While the US Federal Reserve has led the world with its ultra-hawkish stance, raising its policy rates in a steadfast manner. The differences in monetary policies could nurture different directions for equities in respective markets, namely hawkish or tight conditions for the US vs dovish easing condition for the Japanese market. 3) Difference in accounting/Financial years – Differing accounting practices and book closure dates mean flows will differ for each market as institutional traders prepare to close their positions for their financial year. 4) Investors trying to front-run the January effect, where investors re-establish their positions after tax loss harvesting in December. These factors combined drive the Japanese and US markets differently, especially over this, year-end, holiday season. On to specifics, one way to look at the spread between the US and Japanese market could be to use the S&P500 Futures and Nikkei 225 Futures as proxy for the individual markets. Adjusting each Futures contract by the point value, $50 USD x S&P 500 Index point for the S&P500 Futures and $5 USD x Nikkei Stock Average for the Nikkei 225 Futures allows us to compare the two on a contract value/dollar for dollar basis. Applying the same, buy in the middle of December and sell before March strategy, gives a similar 60% win rate, but the average win now returns 71.4% while the average loss is -18.3%. A very rough back of the napkin expected value calculation gives this strategy a rough 35% expected return while the strategy on the Nikkei 225 alone returns roughly 4%. While one could try this strategy, we intend to provide a starting point to reflect on how we could creatively pair products to extract more value out of decades-old strategy. For example, on CME the listed Japanese Index Futures suite alone consists of products, such as the Dollar & Yen denominated Nikkei 225 (NIY/NKD) and Topix (TPY/TPD), all of which could be used to form variants of the above strategy. Something to think about as we head into the holiday season and prepare ourselves for an even better trading year ahead. And just like that, we are on our last piece for the year. We will be taking the rest of the year off and back in January with more! Merry Christmas and Happy Holidays everyone! The charts above were generated using CME’s Real-Time data available on TradingView. Inspirante Trading Solutions is subscribed to both TradingView Premium and CME Real-time Market Data which allows us to identify trading set-ups in real-time and express our market opinions. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com Disclaimer: The contents in this Idea are intended for information purpose only and do not constitute investment recommendation or advice. Nor are they used to promote any specific products or services. They serve as an integral part of a case study to demonstrate fundamental concepts in risk management under given market scenarios. A full version of the disclaimer is available in our profile description. Sources: www.jstor.org www.fool.com www.cmegroup.com www.cmegroup.com www.cmegroup.com www.cmegroup.com
CME_MINI:ES1!
by inspirante
15
Short-term trading beat long-termWhy short-term trading into the US market beats the long-term investing in the year 2023? As much as the Fed wanted to dial down the interest hike for the rest of the coming meetings, but they have limited control. It all depends on the forthcoming data, especially the CPI and the employment numbers. If these data continue to have a higher number, the Fed may not have a choice, but to resume back to its massive rate hike. There are 4 types of investor or traders, they are: 1. Long term investor 2. Short term investor 3. Short term trader 4. Intra-day trader Greater volatility is expected in 2023 and why the 2,3, and 4 may works better in 2023. This is what we will be discussing today: Content: • Investing types & its time-frame • Short-term trading strategy CME Micro E-Mini S&P Futures Minimum fluctuation 0.25 point = $1.25 1 point = $5 10 points = $50 100 points = $100 Disclaimer: • What presented here is not a recommendation, please consult your licensed broker. • Our mission is to create lateral thinking skills for every investor and trader, knowing when to take a calculated risk with market uncertainty and a bolder risk when opportunity arises. CME Real-time Market Data help identify trading set-ups in real-time and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com
CME_MINI:MES1!Short
by konhow
2
For Bitcoin, Investing and Hedging Go Side-by-SideBITSTAMP:BTCUSD Bitcoin (BTCUSD) fell below the psychologically important $30,000 level in the beginning of June, after it briefly reached $31,800 on May 30th. In early May, the leading cryptocurrency touched bottom around $25,000 amid the US stock market selloff. Extreme price volatility is the trademark of Bitcoin throughout its history. Crypto investors’ optimism is short-lived, as the worst is not yet behind us. At $29,850, current Bitcoin price is -57% off the all-time high of $69,215 on November 8th, 2021. A 1-year chart clearly shows an unstoppable downtrend. The Russia-Ukraine conflict is ongoing. China’s Zero-Covid policy and lockdowns slow down its economy and cloak up global supply chain. US inflation and gasoline price are at record-high, even after two rounds of Fed rate actions. On top of these, we never know when Elon Musk might send a tweet and spook the crypto market. Long-term investors may “Buy and Forget” about the daily volatility and hope to see $100K Bitcoin in a few years. For Crypto asset, you don’t want to forget about it completely, as you might not remember how to retrieve it later. I have the unfortunate experience of losing a few ETHs when my iPhone 7 suddenly died. The unique word-combination required to unlock my wallet sits quietly in a safe in Wuhan, where I have not been able to return to since COVID first broke out there in January 2020. For investors holding Bitcoin asset, hedging the downside risk is critical to successful investment. Usually, investors could lock in the price by shorting Bitcoin Futures. However, most of us do not want to give away the upside potential, so this strategy is not ideal. I suggest buying CME Bitcoin Put Options instead. A Long Put gives you the right to sell at strike price during the life of the Options (American) or at contract expiration (European). When Bitcoin Futures trades below the Strike, you could exercise the options and pocket the price difference. Profit from options trade helps offset the loss incurred by holding the Bitcoin asset. Let’s use the case below to illustrate: (1) On May 30, you buy an out-of-the-money Put with a Strike of 29000 on June 2022 CME Micro Bitcoin Futures. The option premium is $60 per contract. (2) At contract expiration, Bitcoin falls to 28000. You exercise the Put and receive a Short Futures position on CME Micro Bitcoin. (3) You immediately buy back a futures contract to close out your Short position. This trade earns you $1,000, which is the difference between market price and strike price. Minus the $60 premium, your options trading profit is $940. If you use the $60 as a cost base, your investment return will be 1567%. What if Bitcoin rises above the Strike? Your investment in Bitcoin asset will increase in value. The premium you paid upfront is the maximum loss from the options trade. I consider this a low-cost insurance contract for protecting my Bitcoin asset. Disclaimers *Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services.
COINBASE:BTCUSDShort
by JimHuangChicago
7
Metals to Break its All Time High AgainMetals to Break its All Time High. I have discussed about Gold before and in this tutorial we will study into Copper. From last week Fed chairman statement, he said “it is premature to be talking about pausing our rate hike. We have a ways to go." The continuous inflation is almost a certainty into next year, and what asset or instrument works well with inflation? Content: Why interest in copper again • Fundamental • Technical 5 Major Copper Uses: • Building Construction • Electronic Products • Transportation • Industrial Machinery & Equipment • Medical Copper Consumption Worldwide: 1. China 54% 2. Europe 15% 3. Other Asia 14% 4. America 11% 5. Other 6% Source: Statista 2021 Minimum fluctuation 0.0005 per pound = $12.50 0.001 = $25 0.01 = $250 0.1 = $2,500 Disclaimer: • What presented here is not a recommendation, please consult your licensed broker. • Our mission is to create lateral thinking skills for every investor and trader, knowing when to take a calculated risk with market uncertainty and a bolder risk when opportunity arises. CME Real-time Market Data help identify trading set-ups in real-time and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com
COMEX:HG1!
by konhow
2
Crude Palm Oil’s underperformanceThis chart caught our attention recently. The Crude Palm Oil – Soybean Oil Spread (in USD per Metric Ton) is trading close to an all-time high now. This spells trading opportunity for us as Palm Oil and Soybean Oil are generally considered substitute products, which means, at a large enough price difference, buyers may hop over to buy the cheaper one. Eventually closing the price gap back to its historical mean. Further comparison of Palm Oil against its other substitute, the European Low Sulphur Gasoil Financial Futures, also shows the spread between these products near the high. A price comparison among the 3 products, Palm Oil, European low Sulphur Gasoil and Soybean Oil underscores this price disparity even clearer. The prices of the 3 products have generally trended together, up until July 2022 when Palm Oil started to underperform. Stepping back into the macro side, some potential tailwinds for Crude Palm Oil include; 1) The reopening of China, which would increase the demand for palm oil from the world’s 2nd largest importer of the product. 2) Biofuel Mandates, which would put higher demand pressure on Palm Oil. 3) Slowing production growth in palm oil could lead to supply-demand imbalances, pushing palm oil higher as supply falters. One way to trade this price divergence would be to short the Soybean Oil – Palm Oil spread. This trade can be set up by selling 1 Soybean Oil Futures and buying 1 USD Malaysian Crude Palm Oil Futures. However, do note that in such a set-up, the position is not fully ‘hedged’ as the contract units are different, 1 Soybean Oil Futures has a contract unit of 60,000 Pounds (~27.21 metric tons) while 1 Crude Palm Oil Futures is for 25 metric tons. Another option would be to trade the exchange listed Crude Palm Oil – European Low Sulphur Gasoil Spread (POG) which handles the construction of the spread and is financially settled, removing delivery risk. While it’s hard to ‘call’ the top, such price divergence provides interesting opportunities that we leverage if risk is managed properly. These trade set-ups allow us to express the view that Palm Oil’s underperformance will be closed, either by Palm oil catching up with its substitutes or if its substitutes fall in prices. The charts above were generated using CME’s Real-Time data available on TradingView. Inspirante Trading Solutions is subscribed to both TradingView Premium and CME Real-time Market Data which allows us to identify trading set-ups in real-time and express our market opinions. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com Disclaimer: The contents in this Idea are intended for information purpose only and do not constitute investment recommendation or advice. Nor are they used to promote any specific products or services. They serve as an integral part of a case study to demonstrate fundamental concepts in risk management under given market scenarios. Sources www.cmegroup.com www.cmegroup.com jakartaglobe.id oec.world
CME:CPO1!Short
by inspirante
Another low in play for Nasdaq?Third quarter results for big tech came out last week and it wasn’t pretty. Is this a harbinger of another low? Look at the price action, the Nasdaq 100 is now sitting just below the .5 Fibonacci Level which has marked a local resistance level. Curiously the price structure looks very familiar when compared with the April to June period. In that episode, prices tried to break upwards (1) but lost momentum. This resulted in a large drop to the next lower Fibonacci level (2), followed by a rally back to the 0.382, Fibonacci level above (3), where resistance was met again, and prices fell (4). Is what we are looking at now a reprise? On the macro side of things, a couple of factors keep us bearish. Firstly, the behemoth federal reserve balance sheet is only in the first innings of its reduction program. This worries us as the effect of this reduction is the removal of liquidity in the financial markets which could lead to higher volatility. We will keep our eyes & ears peeled for this week’s FOMC, to identify any potential changes to the quantitative tightening schedule. Secondly, we point back to our previous research and note that the Nasdaq/S&P500 ratio is still at incredible highs, with further room to fall when compared back to the dot-com bubble in 2000. If we layer the 10-year yield (inverted) onto this Nasdaq/S&P500 ratio, one could argue that the tech outperformance could be driven by the decade-long fall in interest rates. With interest rates sharply higher now, and a few more hikes on the cards, we wonder if Nasdaq can truly hold up against the S&P500. With murmurs of a Fed Pivot driving the Nasdaq higher over the past few days, we think this presents a good opportunity for a short position. As laid out by the price structure we observed and the overhanging bearish macro picture we think another low is in play for the Nasdaq 100 index. With FOMC this week and a packed economic calendar, one way to manage risk is to trade the Micro E-Mini Nasdaq 100 Futures, which is a smaller and more manageable contract, allowing you the option to average into your position. Entry at 11,540, stop at 12,150. Target at 10,300. The charts above were generated using CME’s Real-Time data available on TradingView. Inspirante Trading Solutions is subscribed to both TradingView Premium and CME Real-time Market Data which allows us to identify trading set-ups in real-time and express our market opinions. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com Disclaimer: The contents in this Idea are intended for information purpose only and do not constitute investment recommendation or advice. Nor are they used to promote any specific products or services. They serve as an integral part of a case study to demonstrate fundamental concepts in risk management under given market scenarios.
CME_MINI:NQ1!Short
by inspirante
10
Too fast, too furious for Natural Gas?After a sharp drop in August, Natural Gas futures is now sitting close to the long-term uptrend support which has marked key reversal points since June 2020. Our question is whether prices have fallen too fast and too soon? We question “too furious” when we look at the RSI which currently points to oversold levels. Hitting a low close to 24, the last time RSI reached such an oversold level, in February 2017, prices rallied close to 35% over the next 2 months. We also note the formation of RSI divergence now, like the one we observed during the 2017 period. If history is any guide, from a technical perspective we can expect some upside for Natural Gas in the coming 2 months. We question “too fast” as we are at the dawn of the seasonality trade. With demand for Natural gas used for heating generally rising as winter months are approaching, we can reflect on the seasonality behavior of Natural Gas prices over the past winters. A simple strategy of buying in the middle of October and waiting for the winter months gives a 70% win-rate when we look back at the past 10 years. Could we expect the same this winter? On top of these, we think there are a few structural factors that might boost natural gas demand in the US over a longer-term horizon. 1) The recent announcement by the Biden administration that ruled out a ban or curbs on natural gas exports this winter, and Europe’s struggle with the energy crisis spell good news for Natural Gas’s demand. 2) Current Natural gas storage levels are also below the 5-year average as reported by the US EIA . 3) A move away from coal as agreed in the COP26 means alternative energy sources are bound to replace coal. With many coal-powered plants being refurbished to work with natural gas, we see structural demand rising as more of these plants come online. Natural gas’s current technical levels point oversold to us, with the seasonality trade potentially on the cards and an overall supportive macro backdrop, we lean bullish on Natural gas. As Natural Gas is considered a highly volatile contract, we can use the Average True Range (ATR) to set our stops. In this case, we follow the rule of thumb to multiply the ART by 2, which sets our stop at roughly 4.550. Entry at 5.200, stop at 4.550. Target at 6.400. The charts above were generated using CME’s Real-Time data available on TradingView. Inspirante Trading Solutions is subscribed to both TradingView Premium and CME Real-time Market Data which allows us to identify trading set-ups in real-time and express our market opinions. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com Disclaimer: The contents in this Idea are intended for information purpose only and do not constitute investment recommendation or advice. Nor are they used to promote any specific products or services. They serve as an integral part of a case study to demonstrate fundamental concepts in risk management under given market scenarios.
NYMEX:NG1!Long
by inspirante
15
A guide into 2023 with trendlineA guide into 2023 if prices stay below its classic downtrend line; not breaking above. It was all along in its classic uptrend line before 2022, but it has transited into its downtrend on the 3rd week of this year, when it broke below its support. Before 2022 strategy: • Buy on dips and can either target for both short and long-term • Any sell-short, keeping it short-term as it is against its uptrend 2022 and after strategy: • Sell into strength and can either target for both short and long-term • Any long, keep it short-term as it is again its downtrend Disclaimer: • What presented here is not a recommendation, please consult your licensed broker. • Our mission is to create lateral thinking skills for every investor and trader, knowing when to take a calculated risk with market uncertainty and a bolder risk when opportunity arises. CME Real-time Market Data help identify trading set-ups in real-time and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com
CME_MINI:NQ1!Short
by konhow
1
A break of local lows on BTC CME I am looking for next leg downA break of local lows on #BTC I am looking for next leg down 13170 - then lower to fill all CME Futures gaps Big move incoming on the pinch of downtrend mid/linear regression, fib & daily 20ema Get above & hold that 3day 20ema & I would look to pivot _________________________________________________________ This content is for informational, educational and entertainment purposes only. This is not in any way, shape or form financial or trading advice. Good luck, happy trading and stay chill, 2degreez
CME:BTC1!Short
by UnknownUnicorn7216011
Another leg up for crude oil? To answer this question, we need to look at the following: 1) US Strategic Petroleum Reserve The US Strategic Petroleum Reserve is currently at its lowest level since 1984, while the absolute level is worrisome, the speed of the drawdown on the reserve over the past year is more concerning. In an effort to combat rising prices and possibly secure the midterm elections, President Biden has continually announced release from the reserve, depleting close to a third of the reserve since the start of 2022. If and when this extra supply is cut off, oil prices will likely head higher. 2) OPEC Production Cuts With the OPEC announcement to cut production by 2 million barrels per day, the world is yet under more energy supply stress. While the cut is only about 2% of global supply, it does signify a shift in stance from OPEC, clashing with the West as the US condemns OPEC’s actions. With the next OPEC+ meeting taking place in December, we will closely monitor if further production tightening continues. 3) Crude Oil and DXY As Crude Oil is quoted in USD, the dollar’s performance has a great impact on oil prices. The chart above shows the dollar (inverted) against Crude Oil. The 2 generally move together, up until the start of 2022, when dollar strengthened significantly alongside oil. As this relationship stretches further away from the normal, we fear a ‘snap’ may occur should a pivot in the Fed’s policies occur. That would greatly weaken the USD, and push oil prices significantly higher. 4) China’s turn With China still essentially closed from the rest of the world, any shift towards opening the Chinese economy could awaken the world’s 2nd largest consumer of oil. Looking at the Crude Oil Chart, we see a continued uptrend since the negative oil prices fiasco in May 2022. With a stalled attempt to break lower in September, and prices now back in line with the uptrend, we could potentially see higher oil prices from here. We also note the 90$ handle as a significant level, where 2 previous attempts to break past were rejected. But with a clear and decisive break past the 90$ mark, are the bulls in control now? In our opinion, crude oil is like the stone on a slingshot, stretched further and further back by multiple macro factors. If any were to snap, oil could be slingshot higher… Entry at 92.25, stops at 85. Target at 100. The charts above were generated using CME’s Real-Time data available on TradingView. Inspirante Trading Solutions is subscribed to both TradingView Premium and CME Real-time Market Data which allows us to identify any trading set-ups in real-time and react accordingly. To find out more, visit www.tradingview.com under the CME Group exchange to view the real-time data plans available. Disclaimer: The contents in this Idea are intended for information purpose only and do not constitute investment recommendation or advice. Nor are they used to promote any specific products or services. They serve as an integral part of a case study to demonstrate fundamental concepts in risk management under given market scenarios.
NYMEX:CL1!Long
by inspirante
11
Copper’s many tangosIn the following charts below, we will highlight why copper looks interesting to us right now. Firstly, the Copper Outright prices (orange) vs the Calendar spread (black). Copper calendar spread tend to move in-line with its outright prices, until major turning points, when the calendar spread leads the outright price movement. In February 2022, we observed the copper calendar spread making a significant move lower, with the outright prices following suit in April. With the calendar spread making a significant move higher now, is this what they call déjà vu? Secondly, copper prices and the Chinese Yuan have a relatively high correlation as China is the world’s largest buyer of the metal, and by a significant margin. The recent weakness in the Yuan has led copper prices lower, but with the CNYUSD pair seemingly recovering now, could some strength in the Yuan lead the copper rally? Thirdly, the Gold/Copper ratio generally trades within a pretty defined range, with out-of-range moves happening during major market events. The ratio’s recent high can be attributed to copper weakness compared with gold. With signs of the ratio retracing off the upper range, have we marked the end of this move? And is it time for copper to gain some ground against gold? Looking at the price charts, we see copper trading near the significant long-term support level of 3.3. Previous attempts to break this support in July and September were both rejected. On a shorter timeframe, we see a descending wedge pattern forming, which is generally considered a reversal pattern. The same setup is also observed on the Micro Copper contract, which offers greater flexibility and precision in execution. Copper’s interesting relationships with major currencies and commodities, allow us to analyze it from multiple angles. With some relationships at major inflection points now, we lean bullish on copper. Entry at 3.44, stop at 3.1335. Target at 3.8320 and 4.0000 . If you’re keen on understanding more about Copper and its many relationships, do check out our previous research piece: www.cmegroup.com The charts above were generated using CME’s Real-Time data available on TradingView. Inspirante Trading Solutions is subscribed to both TradingView Premium and CME Real-time Market Data which allows us to identify trading set-ups in real-time and express our market opinions. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com Disclaimer: The contents in this Idea are intended for information purpose only and do not constitute investment recommendation or advice. Nor are they used to promote any specific products or services. They serve as an integral part of a case study to demonstrate fundamental concepts in risk management under given market scenarios.
COMEX:HG1!Long
by inspirante
11
What would you have on a date night? Chicken or steak? We’re going to go out on a limb here and say your date night budgets and recessionary risk are likely inversely correlated! As recessionary risk starts to weigh on investors’ minds, purse strings for date nights are likely to be tightened, which spells trouble for the date night classic, wine & steak pair. Cattle Futures have joined the broad market selloff over the past few days as investors remain on edge. This recent move lower has confirmed a break below the neckline support for a double top pattern observed on a shorter timeframe, which is noted as a bearish reversal pattern. On a longer timeframe, the decline has also broken the 4-month long uptrend for Live Cattle. With not much in the way of support, it’s quite possible to see another leg lower, similar to the pattern we observed in May 2022 where prices corrected around 4.5% once the uptrend was broken. Using this as a reference, the 143 range marks the next potential stop for live cattle prices if we were to extrapolate a 4.5% decline from the breakout point. The broken uptrend followed by the confirmation of the double top pattern spells trouble for live cattle prices. As such, we lean bearish on live cattle futures and will likely swap the date night steak for perhaps chicken… Entry at 148.550, stop at 150.325. Target at 144.850 and 143.075. The charts above were generated using CME’s Real-Time data available on TradingView. Inspirante Trading Solutions is subscribed to both TradingView Premium and CME Real-time Market Data which allows us to identify trading set-ups in real-time and express our market opinions. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com Disclaimer: The contents in this Idea are intended for information purpose only and do not constitute investment recommendation or advice. Nor are they used to promote any specific products or services. They serve as an integral part of a case study to demonstrate fundamental concepts in risk management under given market scenarios.
CME:LEZ2022Short
by inspirante
8
Is the GBP on the edge of a cliff?As the British Pound approaches a major support level of 1.4000, we think it is akin to peering over the edge of a cliff. With one of the worst headline inflation rates in the developed markets, crippling energy bills, and a newly elected government, the Bank of England (BOE) is in a place few would want to be in. As the next policy meeting date nears, the central bank is likely to raise rates. But by how much? Too little, and inflation will remain a key issue weighing on the currency’s attractiveness compared to the USD. Too much, and consumers will be crushed with the already astronomical energy bills and rising loan re-payment, likely pushing the UK further into stagflation, something that central banks try to avoid. Either way, pound traders are likely to be disappointed. And we have not even begun to mention the effects the energy bill cap might have on longer-run inflation. The technical setup proves more interesting as the current price lies right on the 1.4000 level, a major support level, only ever breached once in 1984 and retested once in 2020. We think a clear break of this will likely lead the pound to fall harder as traders ride the downward momentum. On a shorter timeframe, the pair is arguably trading in a descending channel. As current prices teeter on the lower channel band, a breakout at the downside could spell trouble, sending the pair lower. There seems to be little in the way to slow the move lower for the GBPUSD pair as both macro headwinds and technical ones beat down the Pound lower against the USD. With the US Federal Reserve meeting on the 21st and Bank of England meeting on the 22nd of September, we expect higher volatility over the next few days, a snap lower could drive momentum traders to further extend the downside move. Entry at 1.1450, stop at 1.17400. Target at 1.08000 and 1.06150. The charts above were generated using CME’s Real-Time data available on TradingView. Inspirante Trading Solutions is subscribed to both TradingView Premium and CME Real-time Market Data which allows us to identify trading set-ups in real-time and express our market opinions. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com Disclaimer: The contents in this Idea are intended for information purpose only and do not constitute investment recommendation or advice. Nor are they used to promote any specific products or services. They serve as an integral part of a case study to demonstrate fundamental concepts in risk management under given market scenarios.
CME:6B1!Short
by inspirante
20