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WHEAT trade ideas

Wheat, Soybeans, and CornWhy Wheat and why now. What about Soybeans and Corn. Looking across the Ags, it seems that Wheat is enjoying the most upside. Why is this. In keeping with my focus on the DMI and ADX, I think you’d have start by looking at the monthly chart of the 3. One of the key tenants of DMI/ADX is that best trades seem to originate when the ADX is below 20 for an extended period of time. And, for Wheat, that has been since June of 2013. Since then, it has moved between a couple of lines and for the most part, remaining below the 13 period EMA of the high. As an aside, in my previous articles, I used EMA’s on the close of price but have moved to a 13EMA on high, 26EMA on low and 20EMA on close with the intent to use them as a channel for pullbacks based of ADX action. June of last year, the downtrend line was sharply broken but before that, the DMI made a significant move when the +/-DI swapped. Although this had happened several time during the past 4 years, what eventually became important is that the low of this candle was never broken while the high was continually tested and broken with the last time starting the recent uptrend. Also, note that during this time that the +DMI continued to make higher highs will not making lower lows. With the ADX moving above 20 in May of this year, a strong signal was given that the market was ready to move up. Now, consider the same discussion for ]Soybeans : Notice the size of the candle that caused the last swap. I’ve included a possible consolidation pattern. And for Corn : With Corn the interesting thing on recent action is that the DI’s changed dominance but did so where the swap was to -DI but with a green candle. I don’t see this too often but seems to give mixed signals.
OANDA:WHEATUSD
by mxb1961
Trading the DMI with ADX, TSI and EMA (WHEATUSD) PullbacksSo far, I’ve focused on how to get into the market based on the DMI swap in dominance between the +DI and -DI. Once you’re in or if you missed the original entry, how can you get into a trend while minimizing your risk. As I’ve noted before, I’ve not been able to successfully trade on a regular basis but my hope is to use everything I’m documenting here to change that. In one of the links that I shared in my first article is a PDF that has some really good stuff on using the PDF to trade breakouts. In it, there is a section on how to trade pullbacks within a trend using a 20 period EMA. In my charts, I use a combination of the 13 and 26 period EMA to sort of do the same thing (I use a range between the two vs. just one EMA). Full credit for the strategy is given in the PDF and the basics of it are outlined as follows: 1. The ADX must me moving up and above 20 2. Look for a price retracement to the 20 period EMA. It goes on to note that “usually the price retracement will be accompanied by a turndown in the ADX” 3. When price touches the 20 period EMA (in my case, when it enters the range or touches the 26 period EMA), “put a BUY STOP above the high of the previous bar” 4. Once filled, enter a protective stop at the newly formed swing low 5. If stopped out, re-enter the trade by placing a new BUY STOP at the original entry price 6. After a successful trade, the ADX must once again turn up above 20 before another retrace The PDF walks through this strategy as outlined above along with providing some examples. However, the examples are based on the same time frame as the original entry. I’d like to explore and propose that in a strong trend at the daily level, the 4 hour chart will provide a short term strategy. By applying the same concept to the 4 hour chart as outlined above then you may be able to find points that either provide opportunities to enter into an existing trend, or add to positions you may already have within the trend. As the 4 hour chart begins to show weakness and a breakdown below the 26 EMA, it’s possible this is an indication that the daily chart will now cycle through the same steps as noted above which would provide an opportunity take profit on existing positions while waiting for the next setup to enter with the trend on the daily chart. I’ve hi-lited areas on the 4 hour chart for WHEATUSD that fit into this strategy with the current up trend on the daily chart that started recently. Note, that the last area in yellow appears to be breaking down below the 26 EMA signaling that the daily chart may begin to cycle through it's own pullback.
OANDA:WHEATUSD
by mxb1961
5
Trading the DMI with ADX, TSI and EMA (WHEATUSD) cont.Setting up a trade based on daily signal using 4 hour chart for timing. In this scenario, the daily chart had its ADX below 20 since July 3rd. When trading with DMI/ADX, periods of breakout after the ADX has been below 20 for at least 7-10 periods can provide good results. In this case, the 4 hour chart had dropped below 20 for an extended period too. On July 17th , price moved up which caused the +DI to cross up over the -DI. Based on Wilder's strategy, you would place a buy stop above the high of the day (either the high or a number greater than it). With this strategy, you may consider the stop at a point below the low for the same day. In cases where the daily range is small, then placing orders in this way may not cause too much of a draw down. However, in case where the daily range is large, the risk is much higher though there are cases where it's just the way it works out (recent ngas activity that I'll use in an example in a future article). Alternatively, you could choose to place the stop at something like a 75% retrace of the daily candle when placing the buy stop at the high of the day. Another option is to place your buy order as a limit order somewhere in the 25-75% pullback of the daily range that caused the DMI to swap . On the 4hr chart, marks the day that daily DMI swapped dominance while shows the 25/50/75% breakdown of this price range. While this strategy can reduce the risk of having a larger draw down, it also introduces the risk of missing a trade. I'll review more examples of both of these scenarios in next article.
OANDA:WHEATUSD
by mxb1961
Trading the DMI with ADX, TSI and EMA (WHEATUSD)In my first article, I provided a summary of the tools I’m using plus links to some good material that gives more in-depth details of each. As I go through each concept, I’ll refer to the 3 time frames that I will use in determining a trade. • Weekly: to get the overall bias of the market • Daily: to identify a day to take a trade or to setup a trade • 4 hour: to identify the timing or refine the timing of the trade My goal is to trade a small set of markets across various types which will include E-Mini contracts of Wheat and Corn and E-Micro contracts of Euro, Aussie$, and Gold. I’ve tried to trade crude oil (wti) options with mixed success but won’t actually outline trades but use it in the examples. For the E-Mini’s, I’ll limit my initial entry to 1 contract while the for the E-Micro’s (except Gold), I’ll up limit to 2 contracts. My main goal now is to make more money than I lose to remain in market so that I can continue my education in trading. In this article, I’ll review one of the primary aspects of the DMI as outlined by Wilder and that is the equilibrium point of a market. In his book, on page 45, he states that “Good directional movement is not simply straight up or straight down movement. It is also good up and down movement in excess of the equilibrium point. This, in effect, is what the ADX measures. The equilibrium point is reached when the +DI equals -DI.” More detail can be found in his book and various online articles. In the example of WHEATUSD (I trade e-mini wheat but use WHEATUSD for analysis as I can get near real-time data feed on TV without additional cost), I’ve noted 3 times since April of this year that the market has been at an equilibrium point on the daily chart (A, B, and C picked to mark the spot but not to imply any type of wave stuff). In the first 2 cases, the ADX was above 20 while in the 3rd, the ADX was below 20 at the time of the cross. General speaking, when the ADX is declining and is at 25, it is best to be cautious when the DI’s cross. However, when the ADX drops below 20, it’s best not to trade but to wait for some type of pattern to evolve and trade the breakout. I’ll go through examples of this in future articles. For now, I’ll focus on the 3 times where the market reached equilibrium. In his book. Wilder notes that the day this happens, it is an important date to note (on the daily chart but translates into the period of chart you’re using) as it can prove to be significant in the future too. On page 47 of his book, he reviews a key concept in his systems called the Extreme Point Rule and this is either the high or low made on the day. Depending on if you’re long, you would use the low as the stop and if you were short, you’d use the high as the stop. If not in the market, you could use this point to enter the market by placing a ‘stop’ order at this point. In reviewing these three lines, from a hindsight perspective, it’s obvious now that the markets moved in the direction you wanted but in case ‘B’ only after a considerable drawdown. And, in ‘A’ and ‘B’, potentially the same depending on your appetite for drawdowns. There are cases where the market does continue quickly in the direction of the cross but there are also times that it doesn’t immediately. This is the area I’m studying now trying to discover what conditions lead to one vs. the other. Looking at these three cases, another strategy to think about is that of placing the order at a 25-50% pullback level into the candle that caused the market equilibrium with a stop just below/above the extreme of the same day. In my next article, I’ll focus in on the markets noted above and review the daily charts YTD to see how this strategy would have played out.
OANDA:WHEATUSD
by mxb1961
1
Wheat higher: droughts in the US, and trade tensionsWheat has been bullish since the beginning of 2018 and I think there is reason to expect to see it continue. Some of the main drivers are: 1. Potential tariff introduction and major us trade partners like mexico moving to other wheat sources affect trade stability and commodities as a whole. 2. The developing drought in the US this summer Watching for a move higher from the $5.00 level off the major support developed at $4.75. Probably not the most explosive move (unless the drought gets really bad, then watch for a boom!) and will expect a steady grind up into the $5.50-$5.85 through to the end of the year. So what do you think? Is there a case for bullish wheat or will we stay sideways? Would love to hear your feedback, share with me your charts, ideas, and comments! Peace, love, and sweet bamboo, tbp Note: All ideas expressed here are presented solely for learning and educational purposes only. Any gains or losses assumed by trading ideas presented by The Bad Panda are done so at your own risk.
OANDA:WHEATUSDLong
by TheBadPanda