We wanted to show that today’s action seems to confirm a double top. The classic understanding of a double top confirmation is penetration below the trough made between the two tops. We believe the chart will help to illustrate this.
The high on August 7 was 101600 and on August 13 it was 101575. The low in between the two highs was 98575. The difference between the highs and the trough in between is approx 3000. 98575 minus 30000 provides the price target of 95575.
Nothing is ever etched in stone because as we say, “in commodities trading anything can happen and usually does.” We never know what will happen but it is beneficial to be prepared for certain possibilities or eventuialities.
We have included a look at the July 8 low which started the nearly unabated rally to the 101600 high. On July 8 the low was 86525 and then revisited July 12 with a low of 86550. The high in between the two lows was 88450. The difference between that high and those was approx. 1900. Adding 1900 to the 88450 high provided the double bottom price target of approx. 90350. In this case, however, the market continued all the way to its recent high of 101600. So you never know what a simple formation may lead to.
We hope that we have been able to demonstrate the value of another simple trading tool. Depending on the trade management approach that could have been used there’s no telling how much of the upswing to 101600 would have been captured.
We are not attempting to predict or recommend a trade or price objective necessarily at this time. Primarily, our objective is to make people aware of this and open the door to further discussion or exploration.
jmajer@mfglobal.com
Futures and options trading contain substantial risk of loss and may not be suitable for all investors.
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