Breakouts and Breakdowns - Heating Oil and Gold appear headed in opposite directions
SpreadEdge Capital specializes in seasonal spread trading across a wide variety of commodity markets. A spread trade is the simultaneous purchase and sale of the same commodity with different delivery dates. SpreadEdge publishes a weekly Newsletter that provides several seasonal spread trade opportunities every week.
Technical
In reviewing the charts of the markets I often trade, it's evident that Heating Oil has decisively broken through the bottom of its wedge pattern, whereas Gold has established a classic "cup and handle" formation. From a technical perspective, these markets seem to be moving in opposite directions.
The weekly chart, tracing back to the summer of 2022, shows that Heating Oil has developed a wedge pattern and has experienced a downside breakout. Last week, Heating Oil rebounded nearly 3%, yet the trend suggests that lower prices are more probable in the short term.
Conversely, gold has exhibited a classic "cup with handle" pattern and has broken out upwards. The most striking aspect is the pattern's prolonged duration. The chart in question is on a monthly scale, with the cup's left side originating in late 2011, a full 12 years prior. The extended duration of the pattern, coupled with the highly bullish "cup with handle" formation, is further emphasized by the vigorous breakout. To top it off, the breakout has demonstrated remarkable continuation.
Based on these charts, Heating Oil and Gold appeared headed in opposite directions.
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More Information
The SpreadEdge Weekly Newsletter is published every weekend and provides a broad overview of the important seasonal, technical, and fundamental indicators within the Energy, Grains, Meats, Softs, Metals and Currency markets. In addition, spread trade recommendations and follow-up on open trades is also provided. For a free copy of the Weekly Newsletter, please send an email to info@SpreadEdgeCapital.com
Darren Carlat
SpreadEdge Capital, LLC
(214) 636-3133
Darren@SpreadEdgeCapital.com
Disclaimer
SpreadEdge Capital, LLC is registered as a Commodity Trading Advisor with the Commodity Futures Trading Commission and is an NFA member. Past performance is not indicative of future results. Futures trading is not suitable for all investors, The risk associated with futures trading is substantial. Only risk capital should be used for these investments because you can lose more than your original investment. This is not a solicitation.
On the date of publication, Darren Carlat did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.