Erich's Update for Wednesday, August 24, 2005

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Market Update for Wednesday, August 24, 2005
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Erich http://www.supportandresistance.com

"We should be taught not to wait for inspiration to start a thing. Action always generates inspiration. Inspiration seldom generates action." -Frank Tibolt
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1: CURRENCIES
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September Australian Dollar ADU5
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Still looking for another chance to sell the AD. I thought about shorting today's support, but I don't feel really comfortable about it, so I think I'll just watch tomorrow.
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September British Pound BPU5
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Well it looks like it's time to put up or shut up. The BP fell to support and is testing the RSI trendline as per request, so I'll look to buy above resistance on a bounce tomorrow.

*BUY September British Pound at 180.17
*Stop 179.43
*Approximate Risk Exposure: $462 per contract
*Profit Target: 183.19
*Approximate Profit Potential: $1887 per contract
*RRR: 4:1
*Degree of Risk: HIGH
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September Canadian Dollar CDU5
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Still looking for another spot to buy into the Canadian Dollar. I suspect we'll see a pause in the action very soon.
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September EuroFX ECU5
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It doesn't matter how you slice it, you can't get a low risk trade in this market. I'm encouraged by today's higher session which confirms the higher support level and suggests that we might be seeing a trend reversal.

For this reason I'll look to buy above the belt of resistance at the 122.80-ish line; however I'll enter well beyond to give myself half a chance at not getting whipped.

*BUY September EuroFX at 123.03
*Stop 122.69
*Approximate Risk Exposure: $425 per contract
*Profit Target: 124.97
*Approximate Profit Potential: $2425 per contract
*RRR: 5 1/2:1
*Degree of Risk: HIGH
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September Japanese Yen JYU5
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The wheels might be comming off the recent Yen rally as the market showed us resistance today when rates traded lower. It remains to be seen if the market can hold support, but I'll run the buy order all the same.

It doesn't cost us anything if we don't get filled.

*BUY September Japanese Yen at 9177
*Stop 9153
*Approximate Risk Exposure: $300 per contract
*Profit Target: 277
*Approximate Profit Potential: $1250 per contract
*RRR: 4:1
*Degree of Risk: Moderate to HIGH
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September Mexican Peso MPU5
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The Peso made a nice move to the downside today for us. We have just over $600 in accumulated profits as of the close; however protecting these profits could be a challenge as the Peso might make a gap higher like it did yesterday - absorbing much of the profit in the meantime.

If you want to try and "ride" the trade as far as possible, place exit stops above today's high. If you want to protect more profit consider using intraday resistance at 92.250. First profit target is 89.775.
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September Swiss Franc SFU5
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Not a very impressive day in the Franc today as rates fell back to trendline support. I'll run the buy order "as is" tomorrow, but we might not get a fill.

*BUY September Swiss Franc at 7933
*Stop 7897
*Approximate Risk Exposure: $450 per contract
*Profit Target: 8107
*Approximate Profit Potential: $2175 per contract
*RRR: 4 1/2:1
*Degree of Risk: Moderate to HIGH
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September US Dollar Index DXU5
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Slightly impressed as the USD finding support today. This makes tomorrow's trade look a little more interesting - hopefully if we get a breakout it will be a clean one though.

*SELL September US Dollar Index at 8787
*Stop 8823
*Approximate Risk Exposure: $360 per contract
*Profit Target: 8619
*Approximate Profit Potential: $1680 per contract
*RRR: 4 1/2:1
*Degree of Risk: Moderate to HIGH
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2: ENERGIES
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October Unleaded Gas HUV5
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Looks like we might get an RSI test out of this market yet. I'll run the same trade tomorrow, but I don't think we'll get a fill. I would like to see the market continue to search for support, then we'll get real close and personal with our entry orders.

*BUY October Unleaded Gas at 183.15
*Stop 181.90
*Approximate Risk Exposure: $525 per contract
*Profit Target: 192.60
*Approximate Profit Potential: $3970 per contract
*RRR: 7 1/2:1
*Degree of Risk: Moderate to HIGH
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October Heating Oil HOV5
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That's what I get for being "cute" with the Heating Oil market - whipsaw!

The daily bar doesn't show it, but the market gapped our buy on the open only to fall and find our sell order. The market did make a little headway before finding support and heading higher, stopping us out of our position.

The energies are a little confused right now. Think I'll just watch tomorrow.
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October Crude Oil CLV5
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Here we are again, right back to the same numbers that whipped us the other day. As apprehensive as I am about losing another $400, we do have an RSI bounce and we're trading right back at the 6620 resistance.

Oh, what the heck...it's only money, right?

*BUY October Crude at 6640
*Stop 6600
*Approximate Risk Exposure: $400 per contract
*Profit Target: 6890
*Approximate Profit Potential: $2500 per contract
*RRR: 6:1
*Degree of Risk: HIGH
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3: FINANCIALS/INDICES
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June (06) Eurodollar EDM6
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The ED continued higher through the resistance above the market. No matter, we'll run the sell order again tomorrow, and if rates climb higher still we'll adjust the entry to reflect the new numbers. I still maintain that short is the best position for this market at the moment.

*SELL June (06) Eurodollar at 95.54
*Stop 95.625
*Approximate Risk Exposure: $212 per contract
*Profit Target: 95.245
*Approximate Profit Potential: $737 per contract
*RRR: 3:1
*Degree of Risk: Moderate
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September mini-DOW YMU5
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Still nothing interesting in the DOW for now.
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September mini-NAS NQU5
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Okay, so it wasn't the best trade I've ever suggested, but it looked good at the time.

If you were short this trade, then you would have been stopped out this morning as the NAS did a little bounce off yesterday's lows. We've got a bit of support here, but I would like to see the market fall off to the 1560 support, and if we get a reaction here, then we'll get serious about buying.
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September mini-S&P esU5
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Looking for support at 1210, but other than that I don't see anything that I want to do with this market right now.
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4: GRAINS
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December Corn CZ5
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Is corn ready to head lower tomorrow? I think it might be. I considered tightening the entry a bit, but I'll probably run with what we've got. I feel pretty good about shorting last week's low.

*SELL December Corn at 223 1/4
*Stop 219 3/4
*Approximate Risk Exposure: $175 per contract
*Profit Target: 205 1/4
*Approximate Profit Potential: $725 per contract
*RRR: 4:1
*Degree of Risk: Moderate
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December Oats OZ5
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Oats gave us still another tap on the 158 support area. Looking through the chart you can see this is a pretty influential support line. I'm going to tighten the entry a bit to reflect the 158 support; however it does mean challenging other support on the way down. The original figures are still the "safest".

*SELL December Oats at 156 3/4
*Stop 160 1/4
*Approximate Risk Exposure: $175 per contract
*Profit Target: 142 3/4
*Approximate Profit Potential: $700 per contract
*RRR: 4:1
*Degree of Risk: Moderate
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September Rice RRU5
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Rice's trend seems intact as prices traded above the old resistance at 688. We've had a couple of strong sessions this week, so we might see another hesitation tomorrow.
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September Soybean Meal SMU5
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Looks like we will have another chance to sell this market tomorrow as today was a very bearish/bull session.

*SELL September Soy Meal at 187.7
*Stop 191.3
*Approximate Risk Exposure: $360 per contract
*Profit Target: 176.3
*Approximate Profit Potential: $1140 per contract
*RRR: 3:1
*Degree of Risk: Moderate to HIGH
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December Soybean Oil BOZ5
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I'm holding the bean oil entry where it is, but if we see another higher session tomorrow and an RSI test, then I'll be sure to tighten it up.

*SELL December Bean Oil at 2237
*Stop 2271
*Approximate Risk Exposure: $204 per contract
*Profit Target: 2123
*Approximate Profit Potential: $684 per contract
*RRR: 3:1
*Degree of Risk: Moderate
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September Soybean SU5
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Ditto for Beans.

*SELL September Soybeans at 601 3/4
*Stop 610 1/4
*Approximate Risk Exposure: $425 per contract
*Profit Target: 566 3/4
*Approximate Profit Potential: $1775 per contract
*RRR: 4:1
*Degree of Risk: HIGH
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September Wheat WU5
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Sold a nice break through wheat's support today. There isn't too much room to tighten stops at the moment, but if you feel you have to you can use intraday resistance at 321 to hide your exit orders behind.

First profit target is support at 300 3/4.
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5: MEATS
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October Feeder Cattle FCV5
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I'm looking, really...but I still don't see anything worth trading here.
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October Live Cattle LCV5
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Still looking for a chance to sell cattle, but I don't like the numbers we're dealing with right now. There's just too much resistance around here to figure the right numbers to sell from.
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October Lean Hogs LHV5
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We got the pullback we were looking for and RSI is at a testpoint, but will it bounce? Tune in tomorrow for the answer!
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6: METALS
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September Copper HGU5
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We bought copper late today as prices finally broke resistance. Can't do much with the exit stops right now so we'll have to keep our fingers crossed for tomorrow.

First profit target is resistance at 174.90.
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December Gold GCZ5
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We didn't get a higher session today; however RSI has "refreshed" itself and is trading at the 50% level. As such we might expect a bounce tomorrow and I'll look to buy above resistance at 447 if we get one.

*BUY December Gold at 447.5
*Stop 444.7
*Approximate Risk Exposure: $280 per contract
*Profit Target: 469.3
*Approximate Profit Potential: $2180 per contract
*RRR: 7 1/2:1
*Degree of Risk: HIGH
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September Silver SIU5
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Gee, that looks like a typical day in silver, don't it? ;-)

We're right back where we started, at the 695 support line, so we'll run the same trade as before. No guarantees on this one folks, the market is all over the place.

*SELL September Silver at 693.5
*Stop 698.5
*Approximate Risk Exposure: $250 per contract
*Profit Target: 670.5
*Approximate Profit Potential: $1150 per contract
*RRR: 4 1/2:1
*Degree of Risk: HIGH
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7: SOFTS
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September Cocoa CCU5
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Do you see all the support at 1355? There's at least six hits here...a very strong support line. We'll look to sell this support tomorrow, but you could hold off and wait for the reaction to confirm resistance. It would be a little safer and might clear some of the "clutter".

*SELL September Cocoa at 1347
*Stop 1373
*Approximate Risk Exposure: $260 per contract
*Profit Target: 1207
*Approximate Profit Potential: $1400 per contract
*RRR: 5:1
*Degree of Risk: Moderate to HIGH
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September Coffee KCU5
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It doesn't look like coffee likes the support we're at and is rallying a little higher to find resistance. You could run the trade again tomorrow in case we get one of those crazy coffee days, but I think I'll watch.
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December Cotton CTZ5
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Cotton didn't run away from us today as prices traded within yesterday's range. RSI is also at a testpoint, so we can look to sell here tomorrow.

I wanted to cover the trade above the resistance at 4950; however this left far too much money in the trade for a reasonable risk/reward ratio, we we're having to resort to using intermediate resistance to cover the trade.

*SELL December Cotton at 4857
*Stop 4927
*Approximate Risk Exposure: $350 per contract
*Profit Target: 4647
*Approximate Profit Potential: $1050 per contract
*RRR: 3:1
*Degree of Risk: Moderate to HIGH
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September OJ OJU5
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Nothing in OJ right now. Since the market slipped past us last week we're on hold.
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October Sugar SBV5
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That's not good. Sugar traded within yesterday's range which might lead to a bounce tomorrow. Place exit stops above the resistance at 965 by at least a couple of ticks in case the market backs up on us.