July 28th, 2010 - Issue #542

In This Issue

1. Futures Trading: Understanding Chart Patterns
2. Commodity Futures: Live Cattle Bulls Fade Just a Bit; Feeders Still Technically Strong
3. Futures Market: Economic Calendar

1. Futures Trading: Understanding Chart Patterns

Occasionally in our newsletter, we will feature various tools that we feel may be helpful to you as a trader. This week, we'd like to encourage you, especially if you are a day trader, to take a look at E-Futures Chart Patterns.

Learn about 20 of the most common chart patterns, how to identify them, and what they may mean for your trading.

Sample: Broadening Bottoms

A broadening bottom is a chart pattern that can occur on an downward trend. It is generally classified as a reversal pattern but some traders argue that there is approximately a 50/50 split between whether it tends to move upwards or downwards upon completion of the pattern. For this reason, it can often be avoided by traders. It can be viewed as the opposite of a symmetrical triangle.

How Do I Recognize a Broadening Bottom Chart Pattern?

A broadening bottom is comprised of diverging support and resistance lines and resembles a megaphone. The rising resistance line and falling support line continue until the trend reverses.

See the example below:

What Does a Broadening Bottom Chart Pattern Mean?

This is a less common chart pattern pointing to a highly unstable market. As support drops and resistance rises, volatility increases.

Register now! Other chart patterns include:

Double Tops
Double Bottoms
Flags
Pennants
Head and Shoulders Tops
Head and Shoulders Bottoms
Triple Tops
Triple Bottoms
Broadening Tops
Broadening Bottoms
Ascending Triangles
Descending Triangles
Symmetrical Triangles
Cup and Handle
Diamond Tops
Diamond Bottoms
Rectangle Tops
Rectangle Bottoms
Rising Wedge
Falling Wedge

E-Futures Chart Patterns are part of E-Futures Private Content. Register now and receive lifetime access for free.

2. Commodity Futures: Live Cattle Bulls Fade Just a Bit; Feeders Still Technically Strong

by Jim Wyckoff

Disclaimer: The material contained in this letter is of opinion only and does not guarantee any profits. These are risky markets and only risk capital should be used. Past performances are not necessarily indicative of future results.

August live cattle futures on the Chicago Mercantile Exchange have backed well off last week's high of $93.95 as the bulls are starting to fade and need to show fresh strength soon. The live cattle market bulls do still have the overall near-term technical advantage. August futures prices are in a six-week-old uptrend on the daily bar chart, from the June 11 low of $87.20. The bulls' next upside technical price objective is to push and close prices above solid technical resistance at last week's high of $93.95. The next downside technical objective for the bears is pushing and closing prices below solid technical support at $91.00. Near-term chart resistance for August live cattle futures is seen at $92.50, at $92.80, at $93.00 and then at this week's high of $93.60. Near-term technical support is seen at $92.00, at $91.50, $91.20 and then at $91.00. Meantime, August feeder cattle futures bulls still have the solid overall near-term technical advantage. Prices are in a two-month-old uptrend on the daily bar chart and this week hit a fresh nine-week high. The next upside price objective for the feeder bulls is to push and close prices above solid technical resistance at the contract high of $117.80. The next downside price objective for the bears is to push and close prices below solid technical support at $113.50. Near-term chart resistance for August feeders is seen at last week's high of $115.20 and then at this week's high of $115.72. Near-term chart support is seen at Wednesday's low of $114.40 and then at $114.00. Stay tuned! Jim Wyckoff

Jim has an excellent daily newsletter where he reviews different markets, alerts you for potential trades and much more. Included is his great bi-weekly newsletter with charts and a little longer term outlook. We recommend checking out his website, educational CDROM, and services at Jim Wyckoff

3. Futures Market: Economic Calendar

Source: Moore Research Center, Inc.

* Please note that the information contained in this letter is intended for clients, prospective clients, and audiences who have a basic understanding, familiarity, and interest in the futures markets.

** The material contained in this letter is of opinion only and does not guarantee any profits. These are risky markets and only risk capital should be used. Past performances are not necessarily indicative of future results.

*** This is not a solicitation of any order to buy or sell, but a current market view provided by Cannon Trading Inc. Any statement of facts herein contained are derived from sources believed to be reliable, but are not guaranteed as to accuracy, nor they purport to be complete. No responsibility is assumed with respect to any such statement or with respect to any expression of opinion herein contained. Readers are urged to exercise their own judgment in trading!