Death Cross

The death cross occurs when the shorter term moving average drops and crosses below the longer term moving average. One of the most common death crosses used is the 20-period and 50-period moving average crossover. A death cross is often associated with sharp downward price movement and can be used as a sell signal in the belief that a significant down trend will follow. The position is maintained until the shorter term moving average crosses above the longer term moving average.

DEATH CROSS: CL H8 ON FEB 2018

ADAPTED OPTION STRATEGY: SHORT SYNTHETIC FUTURES

When you are bearish on the market, the short synthetic futures strategy is ideal as it will not be affected by changes in volatility. Profit increases as the market drops. Profit is based strictly on the difference between the exit price and the synthetic entry price. Selling a call effectively removes the risk of time decay for the long put position.

SHORT SYNTHETIC FUTURES : Leg 1

Trading Symbol LO H8
Option Type PUT
Option Strategy LONG
Strike 63.00

SHORT SYNTHETIC FUTURES : Leg 2

Trading Symbol LO H8
Option Type CALL
Option Strategy SHORT
Strike 64.00

ADAPTIVE FUTURES STRATEGY

Trading Symbol GC G8
Strategy LONG
Entry Point 1264.90
Target 1280.00
Stop Loss 1255.00
Contract Expiry FEB 2018

POTENTIAL GAIN PER CONTRACT

The target is set at 61.1 (the low of January 5). As a trend following strategy, the profit should be taken when 20-period moving average crossed above the 50-period one. It is a good idea to take partial profit when the prices hit the target price.

POTENTIAL DOWNSIDE PER CONTRACT

If prices broke above 65.4, the position should be closed with limited loss.

ACTUAL OUTCOME

Death Cross Support Happening Now

Japanese Yen: 6J

Soybean: ZS

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