Cotton had a breakout of an upsloping congestion zone which lasted from mid November to mid December, 2014. After a Wide-Range Expansion bar breakout, price showed a Shooting Star. This is a Candlestick pattern with a big tail on top and close near the low and the open with a small body. This can be a warning of a potential top in price. The top of this bar corresponds with the higheset low of the bar at the previous pivot high in late October. Cotton stalled up at these levels for a few days then fell sharply lower.
Day trades should know all the key levels for today. Thursday, January 15 gapped up and rallied right to the close of two days ago. Price could not hold these elevated levels and fell down to the support of yesterday’s open. Where it bounced up to the close of yesterday and reversed down.
A large potential Head and Shoulders bottom has formed in gold over the last 3 months. The breakout occurred this past Monday around $1230.
Confirmation came three days later on the dramatic rally above $1260.
The potential target is a move above the neckline equal to the distance from the bottom at the head to the neckline. This places potential target at the $1330 area.
A “Hammer” is a candlestick pattern formed after a down move. It shows a lack of acceptance of lower prices.The third day of December showed a Hammer bottom after a downmove. This was also a “spring” off the early November lows. A long position could be taken on a break above the Hammerʼs high price with a stop loss below its low.
The chart shows how many barrels of crude one ounce of gold buys. The three year average is 15.5. Above this and crude oil could be considered cheap in relation to gold. Below, and the price of crude could be considered expensive in relation to gold.
Buy(Crude Oil) possibilities are shown with red circles. Sell possibilities with green circles.