Trade Setups For Week of June 9, 2014

Trans Canada (TRP) Bullish Engulfing

Trans Canada Corp (TRP), a Natural Gas Utility made a bullish engulfing pattern on Friday June 6th. On weekly chart TRP has been on an uptrend since March 2009. The trend line is conventionally drawn by connecting the lows, which includes the flash-crash low of first week of May 2010. Since June 2013, TRP is making sideways progression. In the process it has briefly breached the trend-line and is not hugging it. The weekly candle for last week was a doji. A close above the week’s high will be short-term bullish for TRP.

The daily chart gives some more clarity. TRP made a Triple-Bottom late January forming a Descending Triangle pattern (point A, B and & in daily chart). It broke above the upper-line of the triangle on April 1st (point D) only to fall back in it on April 21st (point E). A week later, it again broke above the upper trend-line. Friday’s bullish engulfing candle was a follow thru of the bounce off the upper-limit line of the broken descending triangle (point F).

True, there are some resistance levels hovering above it. First one, the high of 47.52 made on May 22nd is a minor resistance. The next one is a major resistance as it is the Double-Top 14-Jan-13 and 22-May-13 at the all time high level. A break above that resistance leaves only blue-sky to catch-up for TRP.

Bullish Engulfing For POSCO (PKX)

Korean Steel Maker, POSCO (PKX), also made a bullish engulfing candle on Friday June 6th.A move above the Friday high of 71.28 would be bullish. The first resistance is top-limit of the gap-down of May 27th, which 75.39 is 5.8% above. On weekly chart PKX is forming a descending triangle, which makes the current pattern to be a short-term bullish phenomenon only.

PKX_140609_D PKX_140609_W
Steel Sector Stirring

POSCO, an ADR, is a component of Market Vectors Steel ETF (SLX). SLX is making a symmetrical triangle with a move towards the upper-limit. Between 07-Nov-13 and 31-Dec-13, SLX made a double top at 52-Week high (line A in chart below). It completed the pattern by breaking below the lower support line (line B) on Jan 22nd. Since then it has completed the move down to the measured target of 42.99 (point C), which is almost 1.5 times the height of the channel (between line A and line B) made late last year Now it is in the process of testing last year’s high again provided it clears a couple of immediate resistance levels.

Many of the components of SLX are showing interesting pattern that could be traded to the upside for a short-term move.

ArcelorMittal (MT), is in making an elevated double-bottom (point A and B) or a symmetrical triangle with a potential move to the upper limit.


Nucor Corp (NUE), is trying t o retake the uptrend line that it is making since early Feb after briefly breaching it.


Reliance Steel (RS), is forming an upward channel since early Feb. It is bouncing off the lower channel line with a potential move to the upper limit line.


Note: These are short term patterns only. If you trade them then please watch the price action closely. Maintain a tight stop below the pattern and scale out a portion soon so as to reduce the overall risk.

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