CCI Shows Early Signs of Divergence Also

This is still a little early also, but notice that a volume divergence is forming on the daily chart. Have commodities reached their zenith, or are they close to it? Stochastic (not shown) has also shown signs of being overbought, and the MACD is close to being overbought (also not shown), although it isn't there quite yet. MACD, however, is a notorious lagging indicator, while Klinger Volume (seen above) is the best leading indicator I am familiar with.
With Bernanke talking of more quantitative easing today, I find it hard to believe that commodities have topped out, but the signs certainly point at that possibility. Prices must now confirm this by moving lower in the next few days.

Gold Contracts $40 from Upper Trend Line

This daily chart for gold shows the contraction from the upper trend line today. Look at the blue circle above the green arrow at the top right. My previous post shows the magnitude of the pullback on the intraday charts. This one shows the contraction on the longer-term chart. The second panel also shows a bearish divergence on the volume indicator, and an overbought signal on the stochastic indicator.

Daily Soybeans losing momentum, volatility

I am posting here a daily chart for soybeans. It is showing all the signs of an imminent reversal. Note in the last candle, prices have crossed convincingly through the EMA. Prices tried, but failed, yesterday. I have programmed my EMA so that it changes from blue to red when this occurs. (By the way, I use Tradestation, both for my charts and as my futures broker).

At the same time, notice in the 2nd panel that the Klinger Volume indicator has already turned down days before, and has now also crossed below its yellow trigger line, which is also moving lower.

On the same candle, BOTH the Hull Moving Average (magenta and blue in the 2nd panel), and the Gaussian filter (not pictured in this graphic, but typically shown as green and red in the 3rd panel of my other chart examples), also turned DOWN on the same candle. Thus, all 3 moving averages turned down at the same time. I should also note that the slow stochastic and MACD have also turned down, as has Open Interest.

Will soybeans turn down in price? Only time will tell, but this is a good hint of lower prices to come, or at the very least, fading upside energy and momentum. If I had to guess, I would bet that prices will rise again until the longer Bollinger Moving Average in the top panel draws closer to prices. A sideways movement may be more likely until more long-term traders realize that the big soybean move of the past year is finally coming to an end. I'll be ready, however, for a new move up and amplification of the bullish trend, as has happened in the past. Be ready for anything the market gives you.

One last thing: Since hedge fund traders and hedgers (not the same thing) often use them, I have added the 50-day (light blue) and 200-day (magenta) Simple Moving Averages to my daily chart. Since so many people consider them to be important, I wanted to be able to see them. They represent important potential support.

Dream soybeans trade

This is the kind of trade that we traders live for. It was both profitable and quick, lasting only a little over 20 minutes. I like trading the last hour of the grains trading session because it intensifies and moves smoothly.

I like to enter when prices cross the Exponential moving average, and the Klinger Volume indicator (2nd panel, red/green line crossing the yellow MA) cross at almost the same time. It is an added plus if prices have recently crossed the Bollinger Moving Average (yellow dashed line), and prices are coming off of recent highs, which they also did in this case.

I decided to exit at the end when BOTH the Klinger indicator and the MACD showed a bullish divergence at the same time, as indicated by the green lines in the 2nd and 4th panels. I have marked them with green arrows.

I probably would have gone long at the point where I exited part of my trade, except that after prices cross over the EMA, I require a confirmation by continued price movement in the new direction, which didn't occur. If there is no follow-through, then I will hold my position, or perhaps reinforce my position by adding to it. I am reluctant to reverse my position immediately following a sustained move, as occurred in this situation. Usually, after a significant move in one direction, prices will take awhile to stabilize, giving me more than one opportunity to exit. I like to see a 2nd attempt to move up, with a higher low than the previous one, before I change directions.

In this case, I wish I had added to my position, but I didn't because the Bollinger Bands were contracting rapidly and the stochastic was oversold.