FuturesTechs Blog

As per our previous post, where we looked at how we’d done over the year in the Bund, here is a similar excercise for Brent Crude:

Brent has been through a volatile period this year and proved difficult for many investors and fund managers to trade successfully. At FuturesTechs we’ve called things pretty well, capitalising on the move up at the start of the year as the Libyan situation escalated, and subsequently calling the move down. Sideways trade since has proved a challenge, but our trend following mantra and reliance on Candlestick patterns as well traditional reversal signals has ensured a vast percentage of the moves have been captured. The chart and captions below review our commentary and thoughts at some of the major turning points throughout the year.

A: Maintained a Bullish SkewBar throughout the start of the year until a neutral stance during a period of consolidation late January.

B: Highlighted the upside breakout as Bullish and called for a move to 104.98.

C: Maintained a Bullish stance during this pullback as a ‘Buy the Dip’ scenario

D: ‘‘Only a big reversal pattern on the daily chart would see me thinking of anything other than bullish thoughts’’ 24.02.2011

E: ‘Shooting Star no confirmation’ – Still Bullish.

F: ‘‘Bearish Engulfing Pattern. For the first time in a while I might just disagree with an outright bull trend following approach.’’

G: ‘‘Are we breaking this consolidation phase to the upside? YES WE ARE!’’

H: ‘‘Don’t buy Brent Crude today’’ Rule of 9.

I: ‘A drop through 119.03 will give us a Double Top sell signal’ 05.05.2011.

J: ‘We would expect 113.50 to continue to hold and for 115.48-62 to give way some time soon to give the bulls encouragement to head to higher levels. ‘

K: ‘’Our Bull Skew got smashed to pieces yesterday. All change.’’

L: ‘‘The Hammer candle indicates the potential for a change of trend so about the previous days Marabuzo line at 107.13 we’ll back the bulls expecting a move to 110.90-111.73.’’

M: ‘’The failure to sustain new highs for the move followed by a significant sell off suggests the bears have the upper hand. A sustained break below 114.66-78 see’s our Skew firmly back the bears. ‘’ 02.08.2011

N: ‘…a Hammer candle indicating the rejection of the new low. This is a potential change of trend signal and on a move through Marabuzo and Fib resistance at 106.14 and 107.01 respectively our Skew backs the bulls for a move up to 110.58 and 112.13.’

O: Our SkewBar struggled whilst Brent chopped around, then we said ‘This pullback has left a potential Right Shoulder of a Head and Shoulders Top formation on a shorter timeframe chart’ 19.09.2011.
‘Our Skew is in neutral territory requiring the bears to break 108.07 before backing them.’ 20.09.2011

P: ‘’Our chart has taken a step back  today and put the recent price action within the confines of a broad down trend channel, which we have also labelled a-b-c.  This is an Elliott Wave annotation which we’ve added as it’s possible that this recent move lower is the bottom of a counter trend Wave 4. If this is the case, much higher prices are on the horizon.’’ 06.09.2011

Q: ‘’Friday resulted in the 9th Green candle in a row. The ‘Rule of 9’ suggests that this rally will not post more than 9 green candles. So today we expect to post a red candle’’

R: ‘Buying dips was our favoured outlook, but given yesterdays Engulfing candle and a 3 day Evening Star formation  our Skew is going to tighten to the broken trend resistance at 111.45. below here our Skew turns bearish acknowledging the reversal candles.’’

S: ‘A trend line across the recent lows provides the Neckline of the potential Head and Shoulders Top and provides support at 105.93 today. Our Skew is in bearish territory below 113.53 down trend resistance.’

T: ‘’This morning the Neckline of the Head and Shoulders is being retested and presents a selling opportunity at 105.77. The 61.8% retracement at 102.45 is the next target for the bears. The Head and Shoulders target is 95.42’’

We are pleased to announce that our ipad/iphone App is now available to download from the App Store (simply search for “Futurestechs”).

We would like to invite you (client or otherwise) to download the App.

We are running a 2 week Free Trial Period when you can look at all the reports (After that access will be limited to 1 “sample” report per day).

We would ask that you pass this e-mail on to any friends or colleagues who you think may be interested.

Also any reviews of the App would be most helpful and appreciated, so if you like it please take the time to add a review to the App store.

As you can see from the screen grabs below (click on them for a full size view) the reports look really good on the ipad and, thanks to our friends at wordflow, navigating around the App and finding the reports you want is really easy.

Anyone who decides to subscribe will also be given free access to our Website Member’s Area (in case the kids are hogging the ipad!!) where all the reports are also posted daily.

Cheers,

Clive.

Here is a segment from today’s Brent Crude Technical Analysis report from FuturesTechs. We gave clients a preemptive “call” prior to last week’s sell off, and this morning’s price action, a failure at 118.37, could be the start of the next leg lower.

A free trial is available by following the links on our website.

Getting above 115.62 was good news for the bulls and we are now approaching a couple of big hurdles to the upside in the shape of 118.37 and 119.03. 118.37 is the 61.8% retrace of the move from the highs, and if this is the start of a bear move we really need to see the market fail here. 119.03 is the level that triggered a sell signal when it broke, and boy did we get a reaction when that happened last week!

Above these two there’s little to stop us from getting back up to the recent highs. However a failure at these levels followed by weakness through 116.15 gives the bears something to shout about once more.

Things are getting interesting in the Oil markets, with signs of the market topping out. Our thoughts on the Brent contract are reproduced in this week’s Investors Chronicle, but there is something worth noting in the WTI as well, as per below, our commentary from this morning:

J Welles Wilder, one of the brightest minds in TA in my lifetime, and the guy who came up with indicators such as RSI, DMI and Parabolic SAR, suggests in his book “New Concepts in Technical Trading Systems” (published in 1978, so not that “new”!) that you can get a definitive signal when Divergences occur, by following his “Failure Swing” methodology. RSI topped out (with a reading of 76) on April 8th, when the price chart topped out at 113.46. We have since made a new high for price with a 114.83 print on May 2nd.

RSI topped out at 67.70 on that day (a lower high on the Indicator, a higher high on the price chart, or a “Bearish Divergence” as technicians call it). The low (on the RSI reading) between these two highs was 53, on April 12th. We broke below here yesterday, which gives a “Top Failure Swing” sell signal. These signals are usually pretty timely and robust.

We also broke support at 109.95 yesterday, which moved us “into the red” as far as our SkewBar is concerned.

Please go to http://www.futurestechs.co.uk/professional_trial/ to request a free trial of our service to see if it can aid your trading decisions.

FuturesTechs covers a number of contracts within the Energy complex; Brent Crude, GasOil, NYMEX WTI, Natural Gas, and Carbon Emissions.

As well as this our Commodity coverage includes Gold and Silver, plus Corn, Wheat and Soybeans.

Below is today’s Brent comment and chart. We also provide Support and Resistance levels, gleaned from our analysis of the charts, plus “Automated” levels from things like Pivot Points, Moving Averages, and Market Profile.

For a Free Trial of our service please click here.

Thursday’s high was 126.66. Shy of the 127.02 high from April 11th (looking at the continuation charts).

Friday’s high was 126.10, and yesterday’s high was 126.54, so we have some resistance to worry about all of a sudden.

We also have a potential reversal of the “Double Top” variety, but ONLY if we see a sell off through 119.03, which is our S7 support today, so is still a while away from becoming a reality.

Our chief Technical Analyst Clive Lambert was on CNBC yesterday talking about Gold, Brent Crude and Wheat, saying bullish things about all three.

To request a Free Trial of our Daily Technical Analysis Reports please click here.

Individual traders can have a look on our website on a trial basis by clicking here.

We cover all the major Commodity markets as well as Forex, Equities and Bonds, covering UK, EU and US Markets.

The CNBC clip is on our “Media” page on www.futurestechs.co.uk/media.html

I think i did a reasonable job of explaining it on CNBC this morning (you tell me!!) so instead of babbling on too much here I’ll post the link:

http://www.cnbc.com/id/15840232?video=820121614

To summarise I said that 850 is a MASSIVE support level, and that the weakness to here is a buying opportunity, although if 850 breaks you don’t want to be long, and a “stop and reverse” (see below) strategy might be advisable.

We get “proper” confirmation of a bounce happening if resistance levels like 872.6 and 900 are retaken.

In Brent Crude Oil I mooted the idea that we might be due a bounce some time soon as we’re getting close to some important supports.

And in the Bund Futures I talked about a Double Bottom formation which gave us a buy signal last week.

I steered clear of talking about Equity markets because the short term outlook is a tad confusing, and we haven’t had the best of time calling these of late, if the truth be known.

“Stop and Reverse” is where you have a position and you get out of it with a stop order, but at the same time you do the same trade to create an opposite position.

For example say you were long five lots of Gold at 870 with a stop order at 845, that means you want to get out and take the loss on your trade if the market goes down as far as 845. A stop order is defined as a market order that’s triggered if your loss reaches a certain level or price. You should always have a stop order on any trade that you put on, and technical levels can be the best way of deciding where to place these orders.

Many people place their stop orders below important support levels (like 850 in Gold) and sometimes, if you think the move below this key level is going to trigger a wave of selling, you may want to initiate a short position at the same time. If you put in an order to sell 10 lots at 845, to continue using our example, you would take the loss on your 5 lot long, then create a 5 lot short position at 845. If the market then went to 775, as we expect, you will offset the 25 point loss on the original buy order with a 70 point gain on the short trade.

Have a good week.

Cheers,

Clive.

I, like many technical analysts, place quite a heavy reliance on Fibonacci levels, especially for “bigger picture” calls and direction.

So what’s it all about? FuturesTechs members have a couple of articles I wrote a few years back that they can access in our Members’ area that explain things (I hope) quite well.

Take a look at the number sequence below:

1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144.

The eagle eyed amongst you would have spotted how this sequence (called the Golden Sequence) comes about:

1+1 = 2

1+2 = 3

2+3 = 5

3+5 = 8

etc etc

Now divide the numbers in the sequence by the number preceding it. You will find that it comes out at a constant 1.618. This is known in mathematics as “Phi” (with a big “P”).

Now divide 1 by 1.618. What do you get ? 0.618.

Some pretty amazing symmetry, eh?! This number is called “phi” (with a small “p”).

Now look at your body. You have 5 fingers with 3 bendy bits on the end of your arms, that also have three bendy bits, that are stuck to your body that has 5 things sticking out of it (arms, legs and head just in case!!). All numbers in the Golden Sequence. There are plenty of occurrences in Nature as well (see the aforementioned articles in our Members area for more).

The most common usage of Fibonacci numbers in the financial markets is when things are retracing a big move, and this is what I thought I’d talk about today, because we’ve just busted through one such level in the Bund Futures.

You see between March 17th and June 19th this year (2008 in case you are reading this in years to come!) the Bund has sold off from 118.51 to 109.65 (using the adjusted continuation charts that we favour for Bond contracts). The market then started to rally, and once this got going we started to target 113.03, because at this level the market would have taken back 38.2% (100-61.8, in case you’re wondering!) of the weakness. This is the first big Fibonacci retracement line. On July 15th we got to a high of 112.88, so just 15 ticks away from our Fibonacci level, and the market promptly fell over. We posted a Shooting Star on that day , a strong reversal pattern in Candlestick analysis (highlighted on the chart below, which you can click on to enlarge). We sold off after this and within a week or so we were back testing the lows from mid June.

The rally that we’ve seen since July 23rd has seen us back testing this key 113.03 level once more, and today we’ve broken above here, on Trichet, and we’ve posted a strong reaction higher to boot.

The way we work here is to look for the 50% and 61.8% retracements as the next targets above once the 38.2% retrace is out of the way, so in the Bund our targets are now 114.08 then 115.13.

Finally I’ve been on the box again, so if you fancy listening to me blabbing on about Brent Crude and the Bund Futures then Click here.

One of the things we at FuturesTechs towers take very seriously is Marabuzo lines.

What are they? A large bodied candlestick on a Daily chart is the result of a big one way push over the course of a day. In the example of large red real bodies the market often wakes up the next day sure in the knowledge that yesterday’s bout of selling should be good enough to guarantee further losses today. But sometimes things feel a bit overdone and there can be a reaction higher the next day. The big question then is whether this is a short term gains that deserves to be sold into, or if the market is going to continue to rally and take back the losses of the previous day?

The Marabuzo line is the halfway point of the real body (ie halfway between the open and close) of any large bodied candlestick, and we’ve found them to be excellent reference levels in the days after this “big event” Candles.

This week’s ICE Brent Crude Oil Chart is no exception. Last Thursday we saw a big down day.

The Marabuzo line of this session’s Candlestick was 133.78.

The high last Friday was 133.69

The high on Monday was 133.57

The high on Tuesday was 133.75.

Close enough?!

Tuesday turned out to be a pretty Bearish day, as was Wednesday. The Marabuzo line of Wednesday’s big red candle was 127.36, and Thursday’s high/failure was 127.25. Close enough?!

Which prompted our Brent Comment today, as per below. You can click on the image to see it in full size.

All very interesting, I’m sure you’ll agree.

Have a good weekend, and be sure to subscribe to our members area so you don’t miss out on these sort of calls. Click here.

Come on Essex in the Twenty20 tomorrow! And a Happy Birthday to my old mate Mickey. How old?! OUCH!!!

Another busy week in the markets:

Bond markets have pretty much gone one way all week, and it’s been quite tidy, barring the first hour blip in the Eurex Bund Futures on Monday. I have spoken to several traders this week as it was the IDX Exhibition in London. To a man they said that Monday was one of the craziest moves they’d ever seen in these markets. Technical Analysis allowed us to step back from this and suggest it may be a selling opportunity. Sweet!

Equities have been pretty predictable, I think. Across most markets is looking increasingly Bearish and I said at the SII Risk Forum last night that I think we’ll see a fresh test of the Year’s lows soon in things like the FTSE, DAX, Dow Jones and S&P. The NASDAQ has been the most resiliant of late, but even that has now given a sell signal.

Oil is a market for the brave right now. It’s just insane!!! In the Brent Crude Oil contract on ICE we’ve seen so much volatility that it does smack of a top, but as yet we haven’t broken any really important supports, so we’re not calling a top. In fact we still consider that weakness should be bought.

And a football tournament that I have absolutely no interest in is, I have to admit, somewhat strange. I really want Holland to keep up the good work, partly because I really like the Dutch people anyway, and partly because Monday’s game was (what I saw of it) a real joy to watch.