Gold Futures Eye Breakout

Gold Futures

Gold futures in the June contract settled last Friday in New York at 1,654 while currently trading at 1,637 an ounce down about $17 for the week still experiencing high volatility daily.

Gold prices remain firm because we have lost about 10 million jobs in the United States of the last two weeks as the unemployment rate has jumped to 4.4%. However, it's pretty much over 10% at the current time as we will wait for next month's monthly unemployment number to confirm that as that should be supportive gold prices as a worldwide slowdown is at hand. Gold prices are trading above their 20 and 100-day moving average as the trend is to the upside. However, the $1,700 level has acted like cement and has not been able to penetrate it on a closing basis, as that is where the true breakout will occur, in my opinion.

The volatility at the current time is exceptionally high. I don't think that situation is going to change anytime soon as all commodity and stock markets are experiencing substantial daily price swings. The Coronavirus has certainly thrown a wrench into the closet as I'm sitting on the sidelines waiting for a better a chart pattern to develop as the risk/reward is not in your favor to take a bearish or bullish position at this time.

TREND: MIXED - HIGHER
CHART STRUCTURE: IMPROVING
VOLATILITY: HIGH

Silver Futures

Silver futures in the May contract is currently trading at 14.54 an ounce after settling last Friday in New York at 14.53 up slightly for the trading week as prices are right near a 3 week high as prices bottomed out on March 18th at 11.15.

We are keeping a close eye on the U.S economy, which has come to a standstill as the unemployment rate is going to be over 10% in the next couple of weeks as money flows are starting to come back into the silver market. At the current time, I'm not involved as the volatility is too high. However, the chart structure is improving as we have been stuck between 14/15 over the last 2 weeks; therefore, the risk/reward is starting to become more in your favor as we could be involved in a bullish position possibly in next week's trade.

Silver is trading above its 20-day moving average, but far below its 100-day as prices topped out on February 24th at $19 an ounce as it's all about the Coronavirus. Once we receive more clarity on that situation, I think that will be bullish stock and commodity prices, so be patient as there's no reason to be involved yet.

TREND: MIXED
CHART STRUCTURE: IMPROVING
VOLATILITY: HIGH

Not A MarketClub Member Yet?

Getting started is easy! Test our tools with a 30-Day Trial.

S&P 500 Futures

The S&P 500 in the June contract settled last Friday in Chicago at 2524 while currently trading at 2488 ending the week on a sour note finishing down about 36 points for the trading week as prices continue to flip flop over the last month.

The chart structure is starting to improve as I'm still looking for a possible bullish position in the coming weeks ahead. The lockdown remains in effect for at least 30 more days as the U.S. economy lost over 700,000 jobs last month, and that's not telling you the whole story as the unemployment rate could exceed 20% in the next couple of months.

The S&P 500 is trading right at its 20-day but far below its 100-day moving average as this situation will not have more clarity about the Coronavirus, which will take some time as the volatility remains too high to take a bullish or bearish position. I have been looking at individual stocks as some of them have been down 40% / 50%. I think if you have a longer-term view, that's the way to play this market at this time, especially the ones that pay dividends as I do believe once America is out of quarantine, you will see tremendous rallies in the commodity and stock sectors.

TREND: LOWER
CHART STRUCTURE: IMPROVING
VOLATILITY: HIGH

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.

Corn Futures

Corn futures in the May contract is currently trading at 3.30 a bushel as prices are right near a 2-year low after settling last Friday in Chicago at 3.46 down about $0.16 for the trading weak lower for the 6th consecutive session. This market has nothing going for it at this time, fundamentally or technically speaking.

Extremely weak ethanol demand inside the United States is one of the main reasons for lower prices, coupled with the fact that we plan on planting 97 million acres, which is over 7 million more acres than 2019 as we could produce a record crop. If you are short a futures contract place the stop loss above the 2 week high standing at 3.53 as an exit strategy; however, the chart structure will improve in next week's trade. current time

The entire grain market looks weak as we head into spring planting, which is just a couple of weeks away as the commodity markets. The U.S. stock market is on the defensive because the Coronavirus is wreaking havoc in the United States as we are in lockdown for at least 30 more days. I see no reason to be a buyer of corn as it is the weakest grain out of this sector, and if you are short, stay short.

TREND: LOWER
CHART STRUCTURE: IMPROVING
VOLATILITY: AVERAGE

Cotton Futures

Cotton futures in the May contract settled last Friday in New York at 51.33 while currently trading at 50.58 down about 75 points for the trading week as prices are hovering right near an 11-year low.

If you are short a futures contract, I would continue to place the stop loss at the 10-day high, which now stands at 54.87. However, the chart structure will start to improve daily next week, therefore, lowering the monetary risk. Fundamentally speaking, the fact that nearly 300 million Americans are in lockdown as no retail stores are open. Hence, demand for cotton is historically low, and it's not going to improve anytime soon as we will still be in quarantine for the next 30 days, and it could even be 60 days as it depends on what the Coronavirus situation does.

Cotton prices are trading far below their 20 and 100-day moving average as the trend is to the downside. Still, for the bearish momentum to continue, we have to break Wednesday's low of 48.35, which I think could happen in next week's trade as I see no reason to be bullish cotton, so if you are short stay short.

TREND: LOWER
CHART STRUCTURE: IMPROVING
VOLATILITY: HIGH

Soybean Futures

Soybean futures in the May contract, which is considered the old crop settled last Friday in Chicago at 8.81 a bushel while currently trading at 8.52 down nearly $0.30 for the trading week as this market remains on the defensive just like most commodities and stocks.

Fundamentally speaking, the USDA survey estimates 83.51 million acres of soybeans for the 2020/21 crop, as that is 9.7% above last year's flood hindered plantings. The largest yr/yr increase to soy plantings both nominal and as a percent of last year was in South Dakota with a 54% increase to 5.4 million acres. I remain bearish all commodities at the current time. I do think soybean prices will retest the contract low, which was hit on March 16th at 8.21, and if you are short, stay short while continuing to place the stop loss above the 10-day high. The agricultural markets remain exceptionally weak and look to head even lower, in my opinion, as I see no reason to be a buyer.

Soybean prices are trading under their 20 and 100-day moving average telling you the trend is to the downside and unless some type of drought develops, therefore, reducing yields this market looks to be in trouble, in my opinion.

TREND: LOWER
CHART STRUCTURE: IMPROVING
VOLATILITY: AVERAGE

Lean Hog Futures

Hog futures in the June contract is currently limit down for the 3rd consecutive session at 48.32 after settling last Friday in Chicago at 64.25 down about 1600 points for the week as prices are right near a 10 year low.

Since the high on March 25th, which was just a week ago, prices are down nearly 40% as this market has plunged as I thought lower prices were ahead. Still, I think this has gotten out of control, and if you are short a futures contract, I would place a very tight stop as we are experiencing massively oversold conditions at this time. Hog prices are trading far below their 20 and 100-day moving average as this is the strongest bearish trend. I thought prices could break 60 and possibly go to 50, which has occurred in today's trade, but a price gap was created today, and I think that will be filled in the coming days ahead.

Lockdown in the U.S is expanding throughout many different areas as the shutdown will last at least for another month; therefore, curbing demand for many commodities as I'm certainly not recommending any type of bullish position. However, the volatility is extremely high, and if you are highly profitable on this trade, don't get greedy.

TREND: LOWER
CHART STRUCTURE: POOR
VOLATILITY: HIGH

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

Michael Seery, President
Seery Futures
Facebook.com/seeryfutures
Twitter–@seeryfutures
Phone #: 630-408-3325
mseery@seeryfutures.com

There is a substantial risk of loss in futures, futures option and forex trading. Furthermore, Seery Futures is not responsible for the accuracy of the information contained on linked sites. Trading futures and options is Not appropriate for every investor. My opinion in this blog are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any futures or option contracts.

2 thoughts on “Gold Futures Eye Breakout

Comments are closed.