German Schatz dip a draw once more
Although the German Schatz has clearly been in a strong bull market for the whole year, we had a very flat September and October. The price appeared to have moved up too far, too fast, and the rally stopped in its tracks. It didn't fall back but it ran out of steam after that last push up in early September.
The chart above shows the trade signals for a classic counter trend entry model. The idea is to always trade in the direction of a strong trend but to enter only on a significant pullback. The trick is, of course, in quantifying that pullback. The method used here is to normalise the distance from the recent peak to volatility, to have a uniform measurement to work with.
Management and risk description
Buy in to the December Schatz, FGBSZ4, on current levels. Note that we're still in December. There's not yet any significant liquidity in the March. Set a fixed stop and target in the market for a known risk and potential reward.
Entry: Enter at current levels, around 110.86 EUR.
Stop: Hard stop at 110.782.
Target: Take profits at 111.016.
Time horizon: Around two weeks.
December 2014 Schatz contract
-- Edited by Kevin McIndoe
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