Until late February, DBA was in a very strong uptrend. As you may have noticed on TV or at the grocery store, agriculture prices have gone up substantially in the past year. The exchange traded fund DBA represents a composite of Sugar, Wheat, Corn and Soy Beans so it has captured much of the recent move up in edible commodities. However, in late February DBA made a new high and has been consolidating ever since, just look at the descending triangle above.I always thought of the descending triangle as a bearish pattern but according to Bulkowski, "if price rises into the pattern it breaks out upward 73% of the time." Clearly, DBA was rising before this pattern formed, and the consolidation looks healthy. Using Bulkoski's measured rule (and statistics) this pattern has a target around $45 but if that hits a much larger breakout will be in place (so it should go up much more). I'd conservatively shoot for the highs ($43.50) and set a stop at the bottom of the pattern ($35.35). Thats a very high reward/risk ratio if you can get in under $36. If you buy in to Jim Roger's thesis then it seems like a good time to be buying DBA.
"I have some gold right here in my pocket" -lol
No comments:
Post a Comment