December 8, 2017

Volume 11, Issue 49

Feature Article

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Technical Trading Ingredients

Wednesday, December 13 at 7 p.m. CT (90 Minutes)

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Bitcoin Gets Launched

Phillip Streible

On December 10 and December 17 the CBOE and CME will finally launch the long awaited Bitcoin Futures contract. This will add a new element to bitcoin changing it from a buy side only trade to having the ability to go long or short. This should bring new larger and institutional participants to the market.

Anytime a new contract gets launched you want to get a gauge of the type of movement to expect, so take a look at the average true range of the last 30 days, week, day and hour.

Last 30 days – High $18,464 – low $5,868

Week- High $18,464 – Low $10,797

Day- High $18464 – Low $14,610

And the last hour as of this writing - High $15,564 – Low $14,796

As one can see based on the wide ranges this is a volatile contract so using a stop loss order is going to paramount.

The question is, will this just be a short lived contract like single stock futures, real estate futures or binary futures, no one knows. Two pieces of advice I can offer when diving into trading this product. Remember, markets tend to fall twice as fast as they rise. This occurs when investors catch a long trending bull move and then when they see their profits start to slip a “panic” occurs and everyone runs for the exit. The second is to remember to plan your trades and trade your plan.

If you have any questions or would like to discuss the markets further, please feel free to contact me at 800-438-4805 or


Additional Bitcoin ArticleBitcoin Futures - Finally becoming a reality!


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Metals - Gold

Gold Futures Break Out to Downside

Frank J. Cholly

The gold futures market spent an entire month basing a bottom around the 200-day moving average at $1,270 to $1,276. While there remained a “lid on the market at $1,300, most traders felt comfortable buying gold under the $1,280 level. There was a clearly defined trading range. Now that the weak longs have been squeezed out, and granted the charts still point lower, I think that the downside is very limited and at the very least the market is oversold. “Bottom and top picking is a fool’s game.” I get that, but what has really changed fundamentally to take $58 of premium out of gold? Is there no need for a “safe-haven”? Is the US Dollar strength going to continue after the widely anticipated December rate hike? In my opinion this selloff in gold was nothing more than a fishing expedition. The market needed a breakout and failed to get a close above $1,300 so why not try the downside at $1,270? I think that gold is a good value at $1,250 and I would expect other technical traders are looking at this level to re-enter the market. All markets have a tendency to over reach, especially on the way down. At the very least, look for a recovery bounce back towards the $1,270 to $1,275 range.

Here’s some food for thought…at what point does gold get some buying support from the Bitcoin buying frenzy?

If you have any questions or would like to discuss the markets further, please feel free to contact me at 800-826-4124 or

Gold Feb '18 Daily Chart


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Energies - Crude Oil

Crude Oil Contained?

Michael O'Donnell

As of Thursday afternoon’s trading, oil has rebounded from the mid-week dip it experienced testing the $56 per barrel level before recovering.  This could mark a return to range bound trading for oil, as seen (for the most part) around this time last year up until March.  Many believe that OPEC does not want to see the price above $60 a barrel due to the profitability of shale production (and refineries) at this level.  That being said, and explaining one side of the charts, OPEC still wants to have as high of a price of oil as possible without adding to competition.

Traders also will keep noting whether the current OPEC quota, recently extended, will continue to be met with compliance.  Wednesday’s American Petroleum Institute number saw a draw in inventories for the first week of December of 5.6 million barrels. For those looking ahead, many will monitor tomorrow’s US employment number as well as rig counts.  Any surprises on these numbers and, of course, geopolitical, such as in the middle east or on U.S. tax changes could add to volatility.

If you have any questions or would like to discuss the markets further, please feel free to contact me at 800-367-7290 or

Crude Oil 60min Chart


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Energies - Natural Gas

Natural Gas Shifts Back to Bearish

Jeff Ratajczak

The trend in January natural gas has shifted back to a bearish chart pattern.  The nearby low of 2.875 has established new support and resistance numbers to base our current bearish exposures on.   A close above the past two day high of 2.998 and 3.127 are needed to negate the current trend and give control back to the bulls.  A close below 2.911 could signal a sell-off back toward the Feb 2016 low of 2.720.   Prices may consolidate in the 3.200 to 3.300 range.  The upper limits of the range can be used as longer term resistance to base trend reversals on.

The close beneath the 9, 18, and 27-day moving averages is bearish.  Momentum studies have dropped from overbought levels and should accelerate selling in the market if stops are triggered.    

A draw of -5 bcf is expected because of milder weather going into the report.  A surprise larger draw may bring buyers into the equation.   A draw near -5 should continue the current trend.

A slightly colder 6-10 day forecast is expected for most of the US.  The Midwest should struggle to see highs above the freezing point.  After that normal, more seasonal weather is expected.  Bearish to neutral positioning are recommended.

If you have any questions or would like to discuss the markets further, please feel free to contact me at 888-874-81104 or

Natural Gas Jan '18 Daily Chart


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Softs - Sugar

Sugar: Fundamentals in Focus While Commodity Funds Punished

Joe Nikruto

This week’s comment finds March sugar under pressure.  The last four trading sessions have seen the March contract trade from 15.15 to a current price of 14.15.  While only 100 points worth of price action the timing and technical ground lost make this move potentially significant for long term price implications.  The recent rally took March sugar right up to 15.50 and had moved commodity trading funds to the long side of the ledger reversing short positions that had been held since early summer.  This caused many analysts including myself to consider the possibility the surplus forecasted for this year, was already built into the price.  Many forecasters and trading houses point to anticipated surplus of 6 million tonnes or more for 2018 but much less so in 2019. It may be the case that, according to a large commodity trading bank, there could be “a muted supply-side response, given the level of protectionism in areas like the European Union, Pakistan, China and India.”  What does that mean?  Sugar producers who are supported by governments won’t immediately adjust production even though in some instances the price received at market is less than the cost of production.  If this is the case surpluses could be higher than currently thought for 2019. Fundamental guesses aside, the chart below displays all the evidence commodity trading funds will need to trim recently added long positions.  It could be the case that they have even been forced to add short positions. Volume in the last 3 trading days has been robust but open interest has changed little. With outside markets like crude and gasoline bouncing back from their own recent slide sugar continues to retreat. Technically March sugar is oversold but it is difficult to see where this drop may slow. 13.70 and 13.60, levels seen in September and October appear to be the next stop.

If you are reading a write up on sugar futures you are likely an ardent speculator. You may be looking at the about to be listed Bitcoin futures as manna from the heavens. New trade, new risks.  What better combination of exciting new markets in Bitcoin futures or other cryptocurrencies and a long standing time tested FCM such as R.J. O’Brien? RJO’s reputation for stability, integrity and transparency will serve traders looking to explore this new opportunity well.  When starting out to capture your edge in this new market why not make confidence in your FCM your first step?  Call us today.

If you have any questions or would like to discuss the markets further, please feel free to contact me at 800-453-4494 or

Sugar Mar '18 Daily Chart



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Softs - Cocoa

Currencies and Risk of Default Pressure Cocoa Prices

Peter Mooses

Six straight down days in the March cocoa contract have traders questioning where we will find support. Thursday’s session may have found a bottom around 1880, but will cocoa reverse going into the weekend. Ivory Coast’s production situation could help a recovery after this short-term downturn. Long liquidating took over the market this week, keeping the bulls on the sidelines temporarily. A weaker Euro and Pound have traders concerned about global demand again.

The concern of financial issues involving exporters haven’t helped the cocoa market either. Will Hershey build a plant in Ivory Coast? – What will this mean for grindings and prices? These questions will create volatility and large swings in the market for the remainder of the calendar year.

If you have any questions or would like to discuss the markets further, please feel free to contact me at 800-826-4124 or

Cocoa Mar '18 Daily Chart

Cocoa Mar '18 Daily Chart

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Softs - Coffee

May Coffee Selloff Continues

Adam Tuiaana

Fundamentally, the overall outlook consensus for May coffee is continued weak demand with a sizeable near and long-term supply situation. Key growing regions of Vietnam have been getting plenty of rain and favorable weather, which continues to keep pressure on May coffee prices. 

The key support level of 12725 from November 1 was violated on November 20. Subsequently, May coffee prices corrected back up to the top of what had been a fairly well-defined and reliable range (134-130), but the violation of the aforementioned 12725 critical support area cannot be overlooked. This looks like a good opportunity to range trade May coffee from the 126 level, back up to the 132 level in the near-term.

If you have any questions or would like to discuss the markets further, please feel free to contact me at 866-536-8601 or

Coffee May '18 Daily Chart


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Agriculture - Grains

Daily Market Update - Grain Futures - 12/08/2017

Stephen Davis

If you have any questions or would like to discuss the markets further, please feel free to contact me at 800-367-7181 or

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Agriculture - Livestock

Big Supply of Market-Ready Cattle Could Shift Demand Down

February live cattle is already down 9.6% from the November 6th reversal top and leaves the market in a short-term oversold condition. The market is however absorbing a hefty supply of market-ready cattle and if consumer demand for higher-priced beef cuts slows once the holiday demand is booked, the cash market could remain in a downtrend. The 5-day forecast is still bone dry for the central and southern plains and the 6-10 and 8-14 day models show below normal precipitation and normal to above normal temperatures. This weather outlook is bearish for the cattle market.

Overall, the short-term trend remains down and the market is vulnerable to further long liquidation selling. The short-term supply outlook is bearish but the market is approaching oversold status. February cattle resistance is at 120.70 and 121.50, with 118.07 as next target.

If you have any questions or would like to discuss the markets further, please feel free to contact me at 800-826-1120 or

Live Cattle Feb '18 Daily Chart


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Dollar Could Ultimately Remain in Control

Tony Cholly

Dollar: Clearly the dollar has ranged up overnight in a fashion that suggests a return to 94.00 could be in the cards directly ahead. However, the dollar should encounter some volatility and most likely a corrective dip following the lack of a forward progression in US monthly payroll readings. On the other hand, traders should remember that Canadian payrolls jumped very significantly in a release last week and that could suggest an upside surprise in the US numbers. On the other hand, the recent flow of other US scheduled data suggests the number will more than likely be down in a 190,000-200,000 expected range. Post report corrective action could be seen down to 93.41

U.S. Dollar Dec '17 Daily Chart


Euro: Not surprisingly, the euro has ranged down and at the same time has reached the lowest level since November 21st and has seen that weak action despite reports of negotiating progress toward a British exit from the euro zone. However, the euro did see negative German export data overnight and it was also presented with an expansion of the French budget deficit and that bearish news comes on top of generally positive US political headline flow. Near term downside targeting is seen at 11799 and a recovery bounce in the euro off US data up to 112851 should be seen as a potential selling opportunity.

Euro Dec '17 Daily Chart



If you have any questions or would like to discuss the markets further, please feel free to contact me at 800-826-2270 or

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Jobs Data Comes in on High Side

Bill Dixon

This morning’s Nonfarm Payrolls reading came in at 228,000.  Consensus was 190,000 with a range of 153,000 to 250,000.  Markets were slightly higher ahead of the report, and were likely waiting for the “all clear” signal from this morning’s data before another potential run at new all-time highs.  Threats of a possible government shutdown seem to be overblown, and progress continues to be made on tax cuts.  The latest in regards to the tax cuts that the Republicans are pushing is that they are now mulling easing up on the degree to which corporations would stand to benefit, which has been one of the biggest sticking points from those across the aisle.  Next week, we have another two day FOMC meeting.  It is all but guaranteed we see another hike, but most of the focus will be on whether or not Jerome Powell, the new Fed Chairman, will stay the course on what Janet Yellen had planned for 2018.  All indications for now is that he’ll likely remain on course if the data continues to warrant further hikes. 

If you have any questions or would like to discuss the markets further, please feel free to contact me at 800-669-5342 or

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This material has been prepared by a sales or trading employee or agent of RJO Futures and is, or is in the nature of, a solicitation. This material is not a research report prepared by RJO Futures Research Department. By accepting this communication, you agree that you are an experienced user of the futures markets, capable of making independent trading decisions, and agree that you are not, and will not, rely solely on this communication in making trading decisions.


The risk of loss in trading futures and/or options is substantial and each investor and/or trader must consider whether this is a suitable investment. Past performance, whether actual or indicated by simulated historical tests of strategies, is not indicative of future results. Trading advice is based on information taken from trades and statistical services and other sources that RJO Futures believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades.

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