CORN: Update

This is the 3rd update for Corn. Please familiarize yourself with my previous work before continuing. Click here for details.

The Trade

Buy:  200 shares @ $47.62

Filled at 47.66

Slippage (.04)

Initial Target: $52.71 with much higher potential. 

Stop: $47.50 

Friday's price action resulted in a loss of ($22.11, inclusive) on this trade. While disappointing in the fact that the trade was not a winner for me... there is a lesson to be learned. That being KNOWING WHERE YOU ARE WRONG AND ACCEPTING A LOSS!

Many beginners fail to learn this important lesson. The following update illustrates how I managed this trade and provides the higher time frame analysis that provided the initial context for the trade.

Why The Trade ( Futures) 

BULLISH CASE

At the weekly chart level, my initial assessment remained bullish.

I received some excellent questions stating that the daily chart level looked bearish.  Let me explain. 

At the daily chart level, Corn remained bullish under the proposed count leading up to the trade. If you evaluate the body of work from each post, you'll see that the Risk/Reward for this trade, was excellent even though a bearish could could not be eliminated (see bearish case below). In fact, I'll take these types of low risk trades all day long. 

Friday's price action failed to invalidate this count. A loss of 732^4 would eliminate the w.ii termination point but only a further decline and loss of 705 negates the bullish count.

BEARISH CASE

Should prints below 705 be realized, I will adopt the following weekly wave count and ...

this count at the daily chart level. Notice that w.(1) would terminate at 687 which is also targets chart support at the open gap.

Teucrium Corn

The trade was made using an ETF, ticker symbol $CORN, as a proxy for Corn. 

As you can see, the same analysis applies.  at the daily chart level. So why did I get stopped out?

Early into Friday session I was following the 15 minute chart. My goal was to look for a 5 wave advance to confirm that w.(ii) low was in place. My entry is shown for your convenience. While price advanced, it stalled at chart resistance. An incomplete count had me looking higher. The subsequent bar that followed erased what in real-time I considered to be the third wave. That was my warning that I could be wrong and a time to take action by either:

1) Exiting the trade

2) Tightening my stop

I choose option 2 because the bullish count could not be eliminated without print below the levels cited in the above futures charts. I wanted to give the trade some room but as I stated in my previous follow up, "IF I WAS WRONG I was wrong in a big way". 

Immediately, I tightened my stop from the initial Stop of $47.50 to $47.62. Why $47.62? Because if w.(iii) up was underway, price has no business below the origin of the wave. This limited my exposure to ONLY (.06) / per 100 shares. As I said, I'll take these trades all day long! I was stopped out and price has now fallen lower bringing question to the count.

What transpires on Monday may bring some clarity to the position of Corn. Until that happens, I'll remain sidelined... looking for a clearer direction.

We'll leave it there for today and ...

Best of Trading

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Fair Disclosure Notice: I was LONG CORN as of Friday but didn't have any position in corn futures markets related to this article.