Commodity Market Wrap
Eddie Tofpik | Jan 03, 2017 09:22
Sugar
Trend?
Last year, despite moves higher at the time, the MAs dictated a bearish bullet, though I did add a question mark to it. This suggestion proved to be valid for the first two months of 2016 as we battled lower against the combination of 1 and 5 Year MAs acting as support. These MAs eventually won out and prices started a rise that lasted until the Jul 2012 high at 23.98 where prices turned over with a tweezer top and headed back down to the 50% absolute fib support of the 21st Century move at 18.09 and have seemingly bounced up from there.
The rise in 2016 and subsequent fall has given me an opportunity to draw bearish Andrews and Schiff Pitchforks, yet it has also given me the opportunity to draw a good uptrend from 2015-to-date. This is the conundrum of the current market – a solid rally ended but and good resistance above but the subsequent decline also seemingly ended with good support below. Perhaps a more neutral stance is where we are going with this market?
The MAs are three up and one down but all but the 1 year MA (currently 18.28) are at seemingly shallow upward angles, though they are indeed all below the current market and therefore support. Apart from previously mentioned levels, support is currently at 18.68, 17.04, 16.56 – 16.65(dynamic), 15.40, 15.21(dynamic), 14.29(dynamic), 13.83, 12.45 and 10.10. Resistance is at 20.16, 20.87(key recent 50% Fib), 21.58, 22.35, 22.92(dynamic), 23.34(dynamic) and 24.88. Given all these points, I’ve moved the bullet point above into neutral.
Coffee
Trend down?
Though I had a bearish bullet point with a question mark last Jan, I tempered my remarks at the time by
…interesting things about 2015’s performance were the two slowing actions of Bullish Haramis (Apr and Jun) and the more important Dec’s action – a Bullish Engulfing Pattern. Whereas the Bullish Haramis did arrest the pace of decline, the outright Bullish Engulfing Pattern has perhaps stated the case for a halt in the decline, a turn to neutral and even possibly a turn bullish – I can’t stress how important this is.
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A turn for bullish is what we did indeed have following my comments, but not before two further attempts lower in Jan and Mar 2016. It was the latter, which turned out to be a key reversal up, that managed to break the back of the declines and saw thereafter rallies back over all MAs and only halted at the 2011-to-date downtrend (currently 173.91), immediately after a bullish key reversal up. I guess if you stop the market then just after a KR Up is the best way of showing it.
We’ve now moved below the recent 50% Fib at 143.51 and now testing the 1 year MA support (currently 136.28). Given recent action it would seem likely that we would continue to try lower MAs are mixed, two up and two down therefore a continuation to look lower would see likely and is reflected in the mildly bearish bullet point above. Support apart from previously mentioned levels is currently at 135.84, 117.03, 114.70(dynamic uptrend), 111.04 and 110.93. Resistance is currently at 142.73 – 143.51, 141.17 – 153.23, 159.65(dynamic) and 174.00 – 175.98.
Corn
Trend Down?
Last year I basically reprised the commentary I made back in 2014 along with the bullet point of a neutral market caught between the 38.2% absolute fib (322 ¼) and the 50% absolute fib (421 ¾) with one exception. This year I could do the same – third year running as we’ve a difference in price close-to-close of just 6 and we’ve only had two exceptions, one upwards which swiftly turned into a key reversal down in Jun and defined the topside of the market these last few years at about 440.
The second was on the downside over Aug – Sep and quickly turned up in a classic pipe bottom pattern and gave further definition on two support areas, the original 322 ¼ and the 2009 low at 296 ¾. Since then, we’ve tested back up and most recently had almost a KR Up on the monthly chart above. I think that sums up the market. It is a ‘mostly’, or rather, an ‘almost’. Neither trying too much up or down other than slightly expanding the trading box. Oddly, rather than continuing, I think that we might be coming to a change.
The large KR Down in Jun might be the start of the next push lower as all MAs are pointing lower and we’ve not had a new high but we’ve definitely had a new low. It all depends on two things, a) the actual strength of the 2009 low at 296 ¾ and if it will fail at the next attempt and b) the Dec KR Up is a false move! It is a big ask but it might be that way.
Therefore, I’ve moved the bullet point above to mildly bullish as we need to see the action after Feb to make sure. I draw your attention to the crossover of the Andrews and Schiff Pitchforks in Sep 2017. Such crossovers usually denote significant change and/or volatility in markets. The previous one in Nov missed it by being between the recent low and the pullback up and the Dec KR Down. Support is currently at 328 ¼, 322 ¼, 300 1/8 – 301, 290 and then nothing really till sub 240. Resistance is currently at 354, 370 ¼, 386 5/8, 421 ¾, 439 5/8 & 521 3/8.
Wheat
Trend Down
Last year I wrote
This past year what we have learnt is that we may have a Descending Triangle Formation working its way through. The 2014-to-date Downtrend(currently 569) is intact and more importantly is a three point downtrend. The pattern has fulfilled as we managed over 2/3’s of the triangle before an excellent key reversal down finally broke the lower support (after a failed earlier attempt) and that would have been fine…looking for further moves down, etc…and a test to the ‘…325, possibly 315 area,
Especially after the great KR Down. However, this hasn’t happened as yet. The reason why is seemingly twofold – the first is the DT has also morphed a bearish Schiff Pitchfork and the centre tine (currently 367 ¼) seems to be the angle of attack of the market.
The second thing is the previously mentioned in Jan 2016:
…band of support dating from 2005 to 2006 that you can see on the left of the monthly chart above.
This is starting to hold up prices on tries lower…so caution on that. It is made up of levels at 357 ¼, 339 ¼, 337 ½, 321 ¼ and 292. Resistance is currently at 428 ¼, 429(dynamic), 440, 486, 505, 510, 524 and 583 – 592. Despite the support and because all MAs are pointing down quite sharply, I’ve decided to maintain the full bearish bullet point above.
Soybeans
Trend?
Despite successive consecutive closes below the 50% absolute fib at 898, it now is obvious that the market did not like being below this level as it did not exploit the move lower and eventually in Mar caused a key reversal up that saw a rapid rise through the 1 year MA, through the resistance band 92 – 1060 and finally up through all other resistances until it hit the 2012-to-date downtrend at 1208 5/8 (currently 1129 ¼) where it suddenly discovered gravity and fell back down.
However, the fall was not to the same lows as previously and so prices in the last three months or so have staged a small recovery and played either side of the recent 50% fib at 1026 5/8 and actually saw Dec action bracketed by the 38.2% topside (1069 ½) and the 61.8% downside (983 5/8). We also now have two new uptrends though they may still be suspect. The nearby one is at 967 ¾ whilst the 2006-to-date one is currently at 873 ¼. If we set these two aside it seems at the moment that we are within a wide range made by the support 844 ½ - 898 and the declining resistance offered by the downtrend…a situation that moves more towards neutral as time carries on.
The MAs are similarly split: one up, one sideways from up and two down. I think on that basis a neutral market is basically what we are observing though within a range and so the bullet point will reflect this. Outside of previously mentioned levels, support is currently at 934, 843, 776 ¼, 708 ½ 7 685 ¾. Resistance is currently at 1110 1/8, 1208 – 1213 and 1255.
Crude Oil
Trend?
Last Jan I suggested,
…with last Friday’s Key Reversal Down (…just) and closing under 40 for the first time since Aug. The pressure is there for lower prices on Monday and next week, perhaps try down to the Aug-to-date Uptrend (currently 39.23) but to honest I’m not sure it looks good. You see the whole pattern since Aug has a Descending Triangle/lopsided H+S feel to it and it would not surprise me if prices punched down to test the Aug low at 37.72. Support is there but then really nothing till 33.56 and then after that a band 32.18 – 32.71.
With that put to print, I did not expect the attack lower to start as soon as I finished…i.e. Jan and continue into Feb. Nevertheless, the Feb action of a bullish, almost a butterfly doji, saw the turnaround back over the recent 50% Fib at 44.32.
However, as soon as prices strayed a second month over the 38.2% fib at 48.63 and we had an indecisive doji cross, prices fell back. For most of the rest of the year, we’ve travelled between the 38.2% fib and the 61.8% fib at 40.01 as we seem to have expanded on a pattern formed over 2015 – 2016, a possible reverse H&S. Now we come to the action in Dec.
This is the first break above the neckline and needs a second consecutive month to confirm. If that happens then we have potential for a test up to the area marked by ‘X’ around 74.00. Now there is a lot of things that can happen before there and we are still looking for a second close over but resistance currently would be at 56.83, 61.67(dynamic) and 62.58. Support is currently at 52.39(dynamic), 50.92 – 51.93, 48.89, 48.63, 44.32 and 40.01.
Should prices have two consecutive close back below the 44.32 level the reverse H&S is negated…and we think about the market again. With this in mind, I now look at the MAs – two down, one up and one sideways – that would normally see me place a mildly bearish bullet point above. However, given the break upwards in the reverse H&S I’d like to place a more bullish bullet point though I feel unable as it is too early in the cycle of the reverse H&S, so I’ve placed a neutral bullet point there for that is as far as I think is appropriate to go at this time.
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