When I began trading there was not a lot of educational material out there. Most of what I learned early on was through experience. Now when I read through trading publications I can only shake my head at some of the foolish mistakes I made because I didn’t know any better. In hindsight I wish I had taken efforts to learn more; unfortunately I didn’t have access to some of the resources that are available now.

If you are just starting trading, or are looking to round out your trading education I can think of no better resource than David Duty’s Common Sense Commodity course. I got a copy recently, and I must say it is one of the most comprehensive texts on commodity trading I have ever come across. You can preview the first three chapters of the course for free by requesting it at this link I know I learned something new from the preview chapters and I’m sure you will too....in fact I was so impressed I signed up as an affiliate!

David says that after you finish his course you will know more about commodity trading than many who trade full time. I believe it. Yes, it’s that thorough. If you haven’t checked out David’s course yet, I would strongly recommend you do.

Personally I don’t think you can ever learn too much about trading. To me, learning about trading is an on going part of being in this business. I make an effort to read a new book or course every month or so. In my mind, education is an investment in my future that pays better dividends than any stock or commodity ever could. You should make your education a priority too.

However you decide to enhance your trading education it is important that you just do it. If you make the effort to increase your knowledge about trading I think you will find as I have, that it is time and money well spent. 

Hope you enjoy this week’s issue.

Corn traded rather predictably last week after taking a mild bounce of the 50% retracement at 255 ½ it continued lower to fill the double gap left behind last July. The market rebounded after filling the gap and continued back above the 50% where resistance at 260 finally stopped it. The next week could be a big one for corn as the market is technically poised to go either way.

Weekly charts show the market against the 61.8% retracement and a weakening downtrend. A close above Friday’s high should see the market continue higher especially if it is bolstered by increasing volume and open interest. There is resistance in the 260-265 range which could make things a little choppy however. Once above 265 it is a little smoother with notable resistance at 270, 272 and again at 275 ½.

If corn continues the downtrend and once again closes below the 50% retracement at 255 ½ it won’t have far to go before it encounters more support to the downside. Just below the 50% are the recent lows at 249 ½ with more support found at 245, 242 and 239 ¾.

Cotton tried to be sneaky last week as it broke upwards out of the channel formed by the 61.8% and 50% retracement levels only to reverse and eventually break through the bottom of the channel. While most secondary indicators were showing that the market might be reversing from its recent downtrend, open interest figures continued to decline indicating that the bullish rally had no strength to it. Later in the week the rally topped out when it encountered resistance at 4610 and promptly fell off over the next few days.

Cotton is also bouncing around the 50% retracement at 4330 which is making it difficult to peg the market direction as it could go either way off this level. The market posted a strong close below the 50% Friday getting as low as 4235 where it was snagged by support. Below here the next support is found on the 38.2% retracement at 4175, with more significant long term support found at 4030. Increasing volume and OI would be a good indication that the downtrend has some strength to it.

While the fundamentals are calling for the market to advance higher there is some serious resistance in the way of an uptrend. A close above the 50% level might be a sign that cotton will attempt another bull rally. Watch volume and OI to make sure that the trend has some strength to it or the result could be short lived. Above the 50% the next resistance is found around 4430-4440 with heavy resistance at 4460. If cotton can get above here it might even have a chance to test Wednesday’s high at 4610

Beans were good to us last week as the market dipped below the 61.8% level of the last uptrend getting as far as low as 532 ¼ before stalling. If the market can continue below these levels there is mild support found at 530 but that is about all there is to hold the market back from retracing to the 50% level at 520 ¾.

While the market is in a downtrend for the short term it seems as though a drop in volume and open interest are indicating that the downtrend might be losing some steam. If this is the case a bullish rally would have to push prices above the 546 resistance near Friday’s high. The next level above here is 552 before encountering more resistance at 560.

Did we nail this market last week or what? Cattle continued to slide last week pausing only briefly at the support at 6950 before completing a 50% retracement of the recent uptrend. The retracement simultaneously fills a gap left on the weekly chart from the first week of September.

Thursday was a large volume day with the bulls coming out ahead forcing the market to close near the high. Friday’s action saw the market continue higher only to stall on the resistance at 7045. When trading resumes Monday we should get a better idea for what to expect the remainder of the week.

There is a fair amount of resistance at the 7075 level just above Friday’s high. A strong close above this level might be a clear sign that the long term uptrend will continue. Just beyond here there is more resistance at 7100-7110, but above here it is pretty clear sailing until 7180.

In spite of the bullish rally towards the end of last week the bears seem to have a grip on the market for the short term. Friday’s low found support on the 61.8% retracement at 6986. If the market can get below here look for it once more to test the support at 6950 and the 50% retracement at 6898. We would need a strong close below the 50% before the cattle would be in a position to test the next support level at 6840.

What more can you say about cocoa. I almost feel like doing a cut ‘n paste from last week’s issue for this week! Just when you think the market might be weakening cocoa manages to post yet another new high, which pretty much sums up last week’s action. The only blemish on an otherwise strong uptrend is the fact that volume and open interest figures continue to dip slightly; however not enough to cause immediate concern.

If the market exceeds Friday’s high it will likely chug along to the long term resistance at 2300. It would be nice to see volume and OI figure pick up slightly to accompany the continued uptrend. The market is getting into some historical resistance at these levels however the immediate and long term trends are for prices to continue higher.

If cocoa did try to reverse and retrace part of its current gains it would first need to get below the long term support at 2170. Below here there is a little room to move as the next support is not until 2124. If the market gets below this level it will encounter mild support again around 2053-2058 but nothing too serious until 1997.

After briefly testing support at 538, sugar exploded for the remainder of the week setting a new high at 689 by Friday. However the uptrend seemed to stall Friday as volume figures dropped off in spite of rising open interest. The low close on Friday might hint of a pending pullback next week.

If sugar decides to give back some recent gains next week it will have to get below the support on Friday’s low of 671. There is a fair amount of support here, but if the market can break below this level look for it to test the support at 658, 646 and again at 638. These are also strong support levels and will likely halt a downtrend before it can encounter the long term support at 622.

If the market can post a close above Friday’s high of 689 however, there is not too much resistance to the upside which would keep the market from testing the long term resistance at 715. This would also complete a rounded bottom formation on the weekly chart by retracing the weekly 38.2% level.

Thank you to everyone who sent me their input last week. Your responses indicated that you would like me to analyze one of the currencies. While we had votes for most of the currencies the Swiss Franc was the winner, and a good choice at that. The Franc has a reputation for being a good trending market and one that is liquid enough to be easily traded with futures or options. Furthermore the Franc makes better moves than some of the other currencies thereby providing better profit potential.

The December Swiss Franc is currently at a crossroads. The market has declined some off of recent highs but has so far failed to get below the 61.8% retracement level at 6546. The last week has seen the Franc continuing the sideways trend that has held the market since early August. We can use the channel that developed in to structure a trade for next week.

The top of the channel can be found at the resistance at Monday’s high of 6814. Just above here there is more resistance at 6484 and 6858. The harder resistance is a little higher at 6920. Volume has been falling off lately even though open interest figures remain strong. A break above resistance would ideally be accompanied by increasing volume as well.

The bottom of the channel could be drawn along the support at Friday’s low of 6700. Below here the market will next encounter strong support at 6673 and again further down at 6628 before once again attempting to breach the 61.8% level at 6546. As with a bullish breakout, a bearish break through the bottom of the channel should be accompanied by increasing volume and open interest figures to be sure that the downtrend has some momentum behind it.

Silver had a lacklustre week where prices fell off slightly from the week before. The market finally found support at the end of the week at 444.50. Silver looks as though it is poised to go higher next week although I would like to see volume and open interest figures increasing if I am to trust the uptrend.

The first resistance level to a renewed uptrend can be found in the 456.50-459.10 range. In fact there is resistance to be found every two dollars or so. Since the resistance is spaced so closely, trading could be choppy as a result. Once the market gets closer to the 38.2% retracement at 470.25 it might find a little more room to manoeuvre.

If the market does continue the recent slide, look for silver to test the recent lows at 440. Below here there is more support to be found at 432 and 427. The downtrend will need some momentum to push prices this low so keep an eye on your volume and open interest figures.

Send me your responses at ErichTHT@hotmail.com and I’ll share the results with you next week. Shaggy will also put up a survey at http://www.tradershelpingtraders.com/surveys.htm

What if I could show you a simple method that would immediately help you become a more successful trader? Would you be interested?

This little method is not difficult to do yet it is overlooked by more than 80% of traders out there. This simple act is what separates the winning traders from the losers. So what is it that is simple yet so powerful? It is a simple shift in attitude really. You can not help becoming a more successful trader when you begin treating trading like a real business.

You see, most traders do not treat trading like a business. (For that matter, most people who are new to business don't treat their businesses like a business!) They do not take trading seriously. They trade for the thrill of being in the markets. They are so anxious to start making money they fail to take the time to properly prepare before starting to trade.

As I already mentioned in the beginning of this issue, having a good knowledge base is an important part of this attitude shift. You need to know how this business works if you are going to be good at it. Think of your own job/business. How long did you have to study and learn before you became good to make money at what you do? There are some excellent courses out there, and I've already told you I think the Commonsense Commodities Course is the best choice.

Another good business investment is charting software.  I recently discovered Gecko’s Track n Trade charting software, and I hafta say their charts are truly amazing. All the charts in this publication are now done with Gecko's Track n Trade. They not only display market information, but they track your trades as well. You simply place your entry and stop loss orders and the software does the rest. I have never come across another tool like this one. Gecko also has a trial feature where you can test the software before you buy. If you are serious about being a successful commodity trader you owe it to yourself to at least check it out. The link is at the bottom in the Charts and Education section, or you can click here.

While you might need to invest some money in your new business for education or charting tools, some business tools are free. Keeping a trading journal is one of the best things you can do to improve your trading, yet traders rarely do it. It is amazing how much you can learn from your past trades simply by making notes on why you decided to put on the trade in the first place and how things eventually worked out. I keep my own “journal” on the back of charts I print out and file away in a folder. Keeping a journal doesn’t have to be complicated to be effective.

For those interested in day trading, you can download a free MS Excel based trade log with time zones on it here.

Remember the key to becoming a successful commodity trader is to treat it like a business. This means you will have to learn the business, have the proper tools to run your business effectively and most importantly, plan your trades properly. By being more businesslike you will have an immediate advantage over the other 80% of traders out there who are not.