A Green Light for CME

 | Dec 08, 2013 | 6:00 PM EST
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Right now, CME Group (CME) looks ripe for a buy entry, and for a few reasons.

First, the price is above both the 200-day and 50-day simple moving averages. Second, the stock is currently testing a key Fibonacci support cluster between $76.82 and $77.97. This zone includes a 0.618 retracement of one prior swing, and a 50% retracement of another, along with a least a couple of 100% projections of prior declines.

So far CME Group is holding above this zone, and we are currently seeing our first buy triggers against the zone.

CME Group (CME) -- Daily
Source: Dynamic Trader

What I find really compelling, however, is the time symmetry -- that is, how the timing of the current move compares with those of prior ones. I've illustrated this on the daily chart above: Six prior swings have lasted between eight and 10 trading days. The current pullback has reached that window -- and we'll often see changes in trend at such junctures.

Besides this, the stock is also on top of two time cycles that came due Dec. 6. One of those cycles was the 1.272 projection of the number of trading days between the Oct. 9 low to the Nov. 4 low. The other was 0.618 of the rally between the Nov. 4 low and the Nov. 22 high.

Now, the recent low was made Dec. 5, which is within the time window for a time cycle to hit. We're seeing both time and price parameters at this last low, so I'm placing my buy-side bet with the risk defined below this price cluster of support. If the most recent low remains intact, then the first target for the setup will come in at $86.10.

As always, if the stock takes out this key support level, I will back off the trade.

For more information on trade triggers, please refer here

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