The soft commodity space continues to experience a breadth of deflationary pressure. Orange Juice has been a leader to the downside over the past several months. Yesterday (4/3/15) at the close, a short signal was delivered for the May Contract (K5), as per the day chart (recent down arrow 1.1675). This may appear to be a ‘late’ short signal, given weakness in this market. It looks as though this goes lower over the intermediate term. Lets have a look.
Recent signals from the OJ market have been breakeven at best, with 2 very profitable swings (seen above). However, the 8 year track record in this market has produced a 78% win rate over 28 signals, 1.63x win:loss. The expectation is for this market to revert to its historical performance over the long term (or the market has changed as it relates to the program). Whenever a statistically strong performing market (over large sample sizes) undergoes a weak intermediate period, I tend to stay with the system, and the stats.
The weekly chart of OJ (above) is showing a long term breakdown from the 09′ uptrend line and looks to be initiating a ‘C’ wave down from the 12′ top at $2.30. The expectation here looks to be the par level on the chart.
The above chart is another look at the day time frame, but I’ve overlayed multiple timeframe structural boundaries (Quarterly – green, Monthly – brown, Weekly – blue). These are trend channels that represent pivot high/low bars, visually in a channel format. When I overlay the ‘true’ market structure over the day chart, I’ve integrated the trend of increasingly larger and more important trading time frame data….more meaningful price data. For example, it would be considered a normal reaction for OJ to rally up to the $1.32 level (Weekly Pivot High Boundary). Moving up to a weekly high is normal action, in a bearish weekly condition, but moving beyond, would be considered abnormal activity, and might shift the short term bias of the market from the bears. In going short at the 1.1675 level in the May contract, I’d be looking to place a stop at 1.45 level, just above the Monthly structural high level — I would not expect to see OJ rally up this high, and I would certainly not expect this market to go make new monthly highs.
Futures Trading 