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Valued Contributor
Posts: 580
Registered: ‎24-07-2017
Accepted Solution

Strong Trend for Lumber

Lumber price action is extremely bullish and ideal for trend followers. There is a fundamental story of fires, hurricanes, etc. There is a technical story of positive price going upwards. The perfect cocktail mix for a profitable trade. 

Valued Contributor
Posts: 580
Registered: ‎24-07-2017

Re: Strong Trend for Lumber

I am replying to myself!

 

The price action is wonderful on Lumber. 

Valued Contributor
Posts: 580
Registered: ‎24-07-2017

Re: Strong Trend for Lumber

The trend is extremely bullish. No big trend reversal yet!

Esteemed Contributor
Posts: 2,277
Registered: ‎10-03-2016

Re: Strong Trend for Lumber

Hi @TrendFollower  Lumber certainly has had a good ride over the last 4-5 months and it will be interesting to see how price deals with it's current encounter with chart resistance from 2004. Traders saw it hence the recent pullback, wonder if the bulls will be strong enough to push through?

Monthly and daily chart.

 

Lumber_20171107_08.47.pngLumber_20171107_08.53.png

Valued Contributor
Posts: 580
Registered: ‎24-07-2017

Re: Strong Trend for Lumber

When Cryptos are involved in a 'bloodbath', Lumber is showing extreme resilience and a very powerful trend.

 

As I write it is up over 500 points and is making new highs.

 

I am targeting the $50000 level. 

 

Lumber_20180116_19.03.png

Community Manager
Posts: 1,154
Registered: ‎20-09-2016

Re: Strong Trend for Lumber

interesting stuff. If this on the back of any fundamental news? Trading central seems to have a contrasting view from a TA point of view... It would be interesting to see your opinions on this?

 

2018-01-17 09_10_44-IG Trading Platform _ Spread Betting.png

 

Valued Contributor
Posts: 580
Registered: ‎24-07-2017

Re: Strong Trend for Lumber

Lumber hit $47912 today. 

 

https://www.woodbusiness.ca/industry-news/markets/2018-lumber-outlook-4684

 

https://www.woodworkingnetwork.com/news/canadian-news/canada-wont-back-down-vows-resist-softwood-dut...

 

http://www.news1130.com/2018/01/17/tla-convention-ongoing-lumber-dispute-us/

 

Also when there has been a bullish move like in Lumber then the market gets attracted like a magnet to round big numbers and the closest one for Lumber is $50,000! 

 

Valued Contributor
Posts: 580
Registered: ‎24-07-2017

Re: Strong Trend for Lumber

Lumber_20180124_18.50.png

 

 

James, 20 MA has been breached. This could be a sign of weakness but it is worth keeping an eye on. 

Valued Contributor
Posts: 580
Registered: ‎24-07-2017

Re: Strong Trend for Lumber

Lumber hit 48347 and is having a real good go at my magic number of 50000. It looks like another leg up to get there.

 

 

Valued Contributor
Posts: 580
Registered: ‎24-07-2017

Re: Strong Trend for Lumber

Lumber_20180126_18.53.pngLumber hit 48717. It is having a really good go for 50000.

 

 

Valued Contributor
Posts: 580
Registered: ‎24-07-2017

Re: Strong Trend for Lumber

I have noticed the last few times Cryptos have had a 'bloodbath' Lumber seems to perform admirably. At the time of writing it is 500 points up. Lumber is known as a defensive asset and performs rather well during recessionary periods or when there is economic downturns. 

 

I shall be keeping a close eye on the price of Cryptos and Lumber to see if any patterns emerge.

Valued Contributor
Posts: 580
Registered: ‎24-07-2017

Re: Strong Trend for Lumber

[ Edited ]

Lumber_20180201_15.25.png

Valued Contributor
Posts: 580
Registered: ‎24-07-2017

Re: Strong Trend for Lumber

As markets generally are down and certain markets such as cryptocurrencies take a hammering, gold is certainly not performing like a safe haven. 

 

Lumber is up 500 points already at time of writing.

Valued Contributor
Posts: 580
Registered: ‎24-07-2017

Re: Strong Trend for Lumber

$49129 was hit by Lumber.

 

My target of $50000 is on course if you look at my previous posts historically. 

Valued Contributor
Posts: 580
Registered: ‎24-07-2017

Re: Strong Trend for Lumber

$49836 was hit today. 

 

This is either going to hit the magical $50000 tomorrow or tease us and another drop coming.

Valued Contributor
Posts: 580
Registered: ‎24-07-2017

Re: Strong Trend for Lumber

The price action of Lumber has a lot to do with the Canadian market and the tariff the US has put on the Lumber coming in from Canada. Trump is looking at a 20% tariff on all Canadian Lumber. However, it is not just the Canadian angle that is causing the spike in Lumber prices. There have been major fires in the US and a major fire in Canada. Generally if you look back historically, when ever there are supply and demand issues the price generally tends to go up.

Esteemed Contributor
Posts: 2,277
Registered: ‎10-03-2016

Re: Strong Trend for Lumber

Strong uptrend chart, note the down gaps are filled quickly while up gaps are not bothered with.

 

Lumber_20180214_21.49.png

Valued Contributor
Posts: 580
Registered: ‎24-07-2017

Re: Strong Trend for Lumber

Yes a very strong chart showing positive and upward price behaviour.

Valued Contributor
Posts: 580
Registered: ‎24-07-2017

Re: Strong Trend for Lumber

Lumber hit my $50000 target today as I expected and suggested previously. I know @JamesIG was a bit sceptical but I think experience in such markets provides the platform for such price targets. There are times when historical price behaviour based on charts cannot be replied upon to indicate future price moves.

 

Lumber hit $50347. 

 

The question now is does Lumber go on and make new highs or does it correct in a major way due to speculative money forcing it above $50000?

 

I think fundamental news will be key with supply and demand and this along with technicals will determine the future price action. It may even go up to $51000 or $52000 which may sucker traders in who enter established trends on new highs. This is very dangerous as there can be a trend reversal imminently.

 

It could go up and then a big drop could follow. Lets see what happens. For all those with long positions just make sure you all have stops in place and please do take your profits on this monumental trade. You can always go back in if the need ever arises. However whilst the price action is going up then just hold. As they say let your winners run. It is all about profit maximisation. Your stop loss should be set in such a way that it only gets triggers on an established trend reversal.

Occasional Contributor
Posts: 22
Registered: ‎18-07-2017

Re: Strong Trend for Lumber

5000 odd upside! Did you trade this?

Valued Contributor
Posts: 580
Registered: ‎24-07-2017

Re: Strong Trend for Lumber

[ Edited ]

I did with some leverage via a spread bet position on IG's platform. The key is using leverage to maximise profits when there is such a strong trend. Of course risk management is crucial which goes without saying. 

 

I am not sure what you mean 5000 odd upside. Had anyone entered it's lowest point over the past few months then 15000 odd upside plus counting. Now add leverage to this and the trade begins to make sense. I did not get in at the lowest point of course as a trend follower I will never enter at the lowest point and never sell at the highest point. It is the chunk of the middle bit that I participate in.

Occasional Contributor
Posts: 22
Registered: ‎18-07-2017

Re: Strong Trend for Lumber


@TrendFollowerwrote:

I did with some leverage via a spread bet position on IG's platform. The key is using leverage to maximise profits when there is such a strong trend. Of course risk management is crucial which goes without saying. 

 

I am not sure what you mean 5000 odd upside. Had anyone entered it's lowest point over the past few months then 15000 odd upside plus counting. Now add leverage to this and the trade begins to make sense. I did not get in at the lowest point of course as a trend follower I will never enter at the lowest point and never sell at the highest point. It is the chunk of the middle bit that I participate in.


Your origional post was on 27th Oct 2017 so was going off that price of lumber which was just below the 45k level. But ye, if you had got in at the v bottom you'd be up 30k points

 

2018-02-19 09_37_47-IG Trading Platform _ Spread Betting.png

Valued Contributor
Posts: 580
Registered: ‎24-07-2017

Re: Strong Trend for Lumber

Lumber hit $52000 a couple of days ago. I would not be inclined to sell any long position until there is a trend reversal which is confirmed. Right now need to be patient and see if Lumber declines below $50000. Whilst it is above this level I would not be even thinking about selling as this could try and attempt $55000. 

 

Observation and Patience will be Key!

Regular Contributor
Posts: 206
Registered: ‎22-02-2018

Re: Strong Trend for Lumber

Read this on investopedia

“Price Drivers

The average home has nearly 15,000 board feet of softwood. As such, lumber investors closely watch the housing starts report, published by the U.S. Department of Commerce. Price drivers include:

housing starts/construction
the U.S./Canadian exchange rate
interest rates
demand for various markets, such as paper
natural disasters and insect infestations (for example, the mountain pine beetle)”

So the question is... which of the above is driving thistrend?
Valued Contributor
Posts: 580
Registered: ‎24-07-2017

Re: Strong Trend for Lumber

If reports are to be believed or should I say if reports are accurate then rising US demand should see support for rising Lumber prices throughout 2018. 

 

Cheesy as it may be but the TREND is your FRIEND.

Valued Contributor
Posts: 580
Registered: ‎24-07-2017

Re: Strong Trend for Lumber

Right Lumber is correcting. It has gone below $50000. Need to establish if it is indeed a correction or big sell off and move downwards.

 

I thinking of anything below $46520 and I would be looking at initiating initiating a short position. This would also mean my stop loss has triggered. 

 

Remember as a trend follower I will never get in at the bottom or sell at the top. I will be looking at participation in the middle part of the trend. 

Valued Contributor
Posts: 580
Registered: ‎24-07-2017

Re: Strong Trend for Lumber

Lumber could be resuming it trend back upwards. If it goes back above $52,000 then it could get very interesting.

Valued Contributor
Posts: 580
Registered: ‎24-07-2017

Re: Strong Trend for Lumber

Lumber is holding firm at around $51000 level.

 

There seems to be a bit of weakness entering the strength of the trend but no distinctive trend reversal yet.

 

It could happen so one must be ready but at the moment just need to be patient and let the price action determine how one must react.

Esteemed Contributor
Posts: 2,277
Registered: ‎10-03-2016

Re: Strong Trend for Lumber

Hi @TrendFollower,  today's daily bar looks like a firm intention to crack the previous high being the biggest bar posted for some time. Interesting chart.

 

Lumber_20180403_21.43.png

 

 

Valued Contributor
Posts: 580
Registered: ‎24-07-2017

Re: Strong Trend for Lumber

A lot can change depending on the time of posting.

 

It seems like Lumber hit $52,300 area. I agree there could be a breakout and the potential is high for this. Lumber may try and go for $55,000 if it can continue. Bullish trends last longer than people think.

 

However, when a bearish trend emerges and it will then it will be far more quicker during a shorter timescale.

 

For now there seems to be a bullish trend emerging and it will be interesting to see if this is short term or longer. 

Regular Contributor
Posts: 206
Registered: ‎22-02-2018

Re: Strong Trend for Lumber

Big day and a bullish push and bounce off that 51k but what’s interesting is it’s on the back of relatively non exciting volume. 485 lots accordingto the daily IG chart.

If you look at say, the last 5 sessions you can see therejs falling volume, and go into the H1 you’re only gonna see that come at the 19.00pm push just before market close.

Session today will be the decider, but I’m on the fence with this one.
Esteemed Contributor
Posts: 2,277
Registered: ‎10-03-2016

Re: Strong Trend for Lumber

Strong push through resistance and 55,000 is as, @TrendFollower says, on the cards. There are no historical resistance levels above, the last prior resistance turned support held well, no reason to suspect this latest level won't also act as good support (stop) level.

 

 

Lumber_20180405_20.34.png

Valued Contributor
Posts: 580
Registered: ‎24-07-2017

Re: Strong Trend for Lumber

The positive and bullish price action for Lumber has arisen from the wildfire led supply restrictions in Canada and the US. Also the hurricanes and tariffs imposed by the US government on Canadian imports.

 

The story from a fundamental perspective is strong and supports the trend shown from a technical perspective based on the charts. This is a very good example of where fundamental and technical analysis support each other and the result is the bullish trend in Lumber over the last couple of years.

 

I think from experience as production normalises and the supply situation improves then the price action will lose some momentum. In my opinion the strong demand in the US and the tariffs on Canadian Lumber should help keep a solid base and a floor under the prices. 

 

The chart for Lumber reminds me of chart for Brazil 60. Both have seen extremely bullish upward trends over a similar period of time. Both have been wonderful long plays. It just shows it is not about the 'sexy' oil or gold plays. Smart money is made in trades where many least expect.

Valued Contributor
Posts: 580
Registered: ‎24-07-2017

Re: Strong Trend for Lumber

$55,000 has been hit as I predicted. 

 

This is a perfect example of how long a strong trend which is extremely bullish can last. Trends can last a lot longer than what most investors and traders think. 

 

Lumber_20180425_20.11.png

Valued Contributor
Posts: 580
Registered: ‎24-07-2017

Re: Strong Trend for Lumber

[ Edited ]

New highs being made by Lumber. It hit $56,200.60 today.

 

When new highs and higher highs are being made then this is simply a trend followers dream. 

 

I accept for those new to trend following that buying or adding to your existing position is difficult when the price is trending so strongly upwards as one is conditioned to buy when the price goes down. This can still be done using oscillators in a strong trending move like Lumber when one is unsure when and how to enter. 

 

One must never fight the trend or simply trade against it. That is extremely dangerous and on the balance of probability you are likely to lose in those situations.

 

From a fundamental perspective, Canada's rail crunch is adding to the soaring cost of Lumber. Add Trump's tariffs and duties along with technical strength then this is a trend that comes once in a generation. Add leverage to this cocktail and the mix is quite simply exhilarating. 

Valued Contributor
Posts: 580
Registered: ‎24-07-2017

Re: Strong Trend for Lumber

$60,122.90 hit today. WOW!

 

What a trend!

 

The risk here is that speculators are now pushing the price up. There could be a sharp fall at any moment so any short term trend reversal could lead into an amplified drop. This could be a possible shorting opportunity to make some profit in a very short space of time but only if any signals / indicators suggest a trend reversal which is certainly not the case at the moment. 

 

 

 

Regular Contributor
Posts: 206
Registered: ‎22-02-2018

Re: Strong Trend for Lumber

So here’s the question - would you be reducing your position at this stage at all? Also what sort of signals do you personally trade to show a reversal?

I glad you posted this as I opened a small position on the back of it... and it’s done quite nicely 👍🏻
Valued Contributor
Posts: 580
Registered: ‎24-07-2017

Re: Strong Trend for Lumber

@PandaFace,

 

I personally would not be reducing my position at this stage. If anything I would be adding. I tend to 'pyramid' upwards so as the price increases I would add to my position on strength. Using oscillators you can buy on any drops/corrections during an uptrend to attempt a more efficient buying price.

 

As I follow the price action then it that very price action that will ultimately signal to you that a possible trend reversal is coming. Whilst watching the price action one of the signals is when the trend begins to slow down. If your are monitoring the price action closely then you will pick up on this signal. There is normally a break in the trend line. Another signal is a strong move against the trend which is normally followed by a pullback. Another signal is when you  see lower highs and lower lows. That is normally a very good indicator which signals a trend reversal. You can also use pivot points but I find trend lines are a very good place to start if you do not have much experience in identifying trend reversals. 

 

What I have suggested above is not 100% guaranteed to be successful but it offers you the best possible chance of predicting potential trend reversals. Spotting weakness in the trending move is a good place to start. For me the key is to follow the price action closely and when you live and breath using price action as a key indicator then you will generally get a feel of the trend weakening as it is occurring but this comes from experience. 

 

I am glad your position is doing nicely and I am glad to have helped. 

Highlighted
Occasional Contributor
Posts: 22
Registered: ‎18-07-2017

Re: Strong Trend for Lumber

Great post @TrendFollower good to read what people are interested in and how they trade these markets, especially with the lesser traded ones like soft commods.