Commodity Futures: Cocoa Loco?
Commodity Futures 12-18-07 (Tuesday): Occasional thoughts on various futures’ contracts.
CCH (March Cocoa): “Price touches T8 and is supported again.”
The T8 is the moving average that we use to define trend. If the T8 is pointing up, we consider the trend to be positive. The opposite holds true for T8’s that are in a downtrends. With a positive trending T8, our preferred moving average, we are constantly monitoring for only long positions. The rules are simple: a. take trades (buys) in the direction of the trend (the T8, which is pointing up) b. buy openings below the T8. c. buy retracements to the T8 intraday.
This simple set of rules has triggered three trades during the past three trading sessions. On each occasion, the price has opened lower than the positive postured T8 or has retraced to the T8. This is an excellent approach to many types of trading. Simply stated: buy touches of a positive T8. The first retracement is always the most important and offers the largest potential return.
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Relevant Tags:commodity futures, moving averages, swing trades, trading systems
Commodity Futures