Trade of the week: short soybeans

(Video Transcription)

Previous Arabica coffee and orange juice trading outcome

Axel Rudolph: Hello and welcome to this week's “Trade of the week” on Monday the 9th of September, 2024. At the end of August, we went short Arabica coffee futures because we had triple negative divergence on our weekly and daily relative strength index (RSI). And you can see that here we have a series of lower highs compared to a series of higher highs with regards to the April, July and also August highs here on the Arabica coffee futures chart.

Now since then, we are in profit by about 67%. This trade worked out really well so far. So what you can now do is lower your stop to either our entry level, which was around 254.75 I believe or so, and thereby we have a potentially risk-free trade on, or you can lower it to the last direction high that was made on Thursday of last week.

So just above 248.13 thereby you have a profit stop. So to still make a profit gets dropped down. But our downside target still in play. And I let this one run personally but that's up to you.

Last week, we did a similar trade that orange juice futures were making an all-time record high. And basically you can see here, that the high made in August was similar to the one in May, but we had a lower high on the RSI again negative divergence.

So I wanted to go short, but we actually got stopped out on that one because we had a very tight stop above the record high here at 488. So we got stopped out on that one and lost 2% of our trading capital, because here at "Trade of the week", we always risk 2% of capital per trade.

This week's trading opportunity

And now this week's trade of the week, what we want to do is actually trade in the direction of the trend. You can see here we have a series of lower highs and lower lows, which is the definition of a downtrend. And it looks to me as if we are now resuming the downtrend again. But we need to have a wide stop, which I would like to place above this resistance area, going back to the February and March and April lows, and also the July high between 1,113 1,144.

So that would be our stop above that area, just in case it would to continue to rise in the short-term. This week's "Trade of the week" is to go short soybeans futures with a stop loss at 1,150 and a downside target at around 910.