Oil
December Futures – We noted on the last report that the futures were bullish but in a corrective phase with key near-term support at USD 90.57; a build in the aggregate open interest (AOI) suggested the market was building to the long side. The futures broke Fibonacci support but held the USD 86.35 fractal, resulting in the price moving higher. The technical is once again considered bullish due to the strength of the recent upside move; however, AOI did level off a little on the back of the original pullback, suggesting there has been some exiting of long positions. The RSI is at 51 and near neutral, whilst the stochastic is in the overbought territory; if the RSI moves below 50, we could see the futures enter a corrective phase. Downside moves that hold above USD 91.53 will warn that the USD 97.27 – USD 98.75 resistance levels could be tested; we target the USD 88.77 fractal support below this level. Technically bullish but vulnerable to a pullback, key support is at USD 90.57 with resistance at USD 98.75.
Iron Ore
November Futures – Technically bearish on the last report two weeks ago, the futures were not considered a technical sell due to a positive divergence in the market. The Divergence failed on the 25/10, resulting in a strong move to the downside, with the price trading to a low of USD 76.90. With the divergence failing and the RSI making new lows, it would suggest that upside moves should be considered countertrends at this point. Upside moves that fail at or below USD 90.36 will leave the futures vulnerable to further tests to the downside; above this level, the technical will have a neutral bias, and near-term support is now at USD 70.14. The divergence failure has changed the technical footprint back to bearish, suggesting upside resistance levels should hold if tested.
US HRC
November/December Futures – Technically bearish on the last report (Nov), with the futures moving higher on the back of a positive divergence. Upside moves that failed at or below USD 795 would leave the futures vulnerable to further tests to the downside; above this level; the technical would have a neutral bias. Elliott wave analysis suggested that the upside moves should be considered countertrend. The futures traded to a high of USD 740 before moving lower, with the price trading down to a low of USD 782, meaning the USD 780 low remains intact. We are now rolling into the December contract with the futures looking to be potentially on an Elliott wave 5; however, a note of caution here, as the price is showing a minor divergence with the RSI; if the divergence fails, it will warn that we see some form of wave extension that would have bearish implications in the future. Technically bearish, the Dec contract still has the potential to test the USD 660 low in the near term; however, we are now a cautious bear, as the lower timeframe wave cycle is becoming less clear. The futures will need to see a definitive break to the downside, causing divergence failure. Otherwise, this trend could exhaust.
Tankers TD3
November Futures – Technically bullish on the last report in what looked to be an Elliott wave 5 of this phase of the cycle. The downside move held above the Fibonacci support zone resulting in the futures trading above our upside target at USD 20.4918 (high of USD 21.1590). We remain technically bullish, but the futures now have the potential to diverge with the RSI above USD 21.1590; not a sell signal; it is a warning that we have the potential to see a momentum slowdown on a new high. Downside moves that hold at or above USD 17.4960 will support a bull argument; the technical will have a neutral bias below this level. However, if we trade to a new high, the technical will be bearish below USD 19.9400. Technically bullish, the divergence, if achieved, will need to be monitored, as it is a warning that we have the potential to enter a corrective phase.
Coking Coal
November Futures – Technically bearish last time but with momentum currently to the buyside supported by the RSI above 50. The futures have increased with price trading above the USD 315 resistance to a high of USD 321. However, we are now seeing a minor pullback with price trading between the 8-21 period EMA’s whilst the 21 period RSI is below its 13-period moving average; if we start seeing the futures close below the 21 period EMA (currently 303), then we have the potential to see the futures come under further pressure. Downside moves that hold at or above USD 293 will support a near-term bull argument; below this level, we target the USD 280 and USD 260 fractal support levels. Likewise, upside moves that fail at or below USD 344 will leave the futures vulnerable to further tests to the downside; above this level, the longer-term technical will have a neutral bias. Technically bearish, buyside momentum is showing signs that it is weakening.