Capesize
Dec Futures – The trend remains technically bearish, having broken the head and shoulders neckline to the sell side (neckline USD 14,750), resulting in the futures trading to a low of USD 10,150. We have seen light buying support in the last five sessions with what potentially looks like a bear flag forming; the price remains below the 8- 21 period EMA’s supported by the RSI below 50. Upside moves that fail at or below USD 15,826 will leave the futures vulnerable to further tests to the downside; above this level, and the technical will have a neutral bias. The head and shoulders pattern would suggest that we have a potential downside target based on the 100% Fibonacci projection at USD 8,500; however, below USD 10,150, the intraday technical has the potential to create a positive divergence with the RSI. This will need to be monitored.
Panamax
Dec Futures – The futures broke the symmetrical triangle to the downside resulting in the price moving USD 5,000 lower. The technical remain in a bearish trending environment with price below the 8-21 period EMA’s supported by the RSI below 50. Upside moves that fail at or below USD 15,809 will leave the futures vulnerable to further tests to the downside; above this level, and the technical will have a neutral bias. The futures are currently holding above the 100% Fibonacci projection of the symmetrical triangle; however, intraday Elliott wave analysis would suggest that upside moves should be considered countertrend at this point, implying another bear wave to follow.
Supramax
Dec Futures – Previously, we had stated that upside moves were considered countertrends; Having spent around six weeks in consolidation, the futures broke to the downside, resulting in the price moving USD 3,675 lower before entering another consolidation phase. Technically we remain bearish, with the price below all key moving averages supported by the RSI below 50. Upside moves that fail at or below USD 16,159 will leave the futures vulnerable to further tests to the downside; above this level, and the technical will have a neutral bias. Intraday Elliott wave analysis would suggest that upside moves should be considered countertrends at this point, implying we should (in theory) test and break the USD 12,750 low.
Oil
Jan 23 Futures – Technically bullish but vulnerable to a pullback on the last report; the only downside move we have seen came from the futures roll. The RSI held above 50, meaning the overbought stochastic is considered less relevant, whilst the futures have now traded to a high of USD 98.81. The trend remains technically bullish, with prices above the 8-21 period EMA’s and the 55-Period MA, supported by the RSI making new highs. Aggregate open interest had levelled off, suggesting we had seen some profit-taking. It dropped further on the back of the futures expiry with only a slight increase on the USD 5.00 upside move, there is an AOI build, but it has been small. Downside moves that hold at or above USD 94.53 will support a bull argument; below this level, the futures will have a neutral bias, leaving the USD 92.33 fractal low vulnerable. Technically bullish with near-term resistance at the 200-period MA (USD 103.11), we can see a more sustained run if we close above and hold above this level. We remain mindful of the AOI and would like to see further builds on upside moves; if we move higher and the AOI drops, it suggests market longs are exiting, warning of potential exhaustion.
Iron Ore
December Futures – Technically bearish last week due to the futures trading to new lows alongside its RSI, upside moves were considered countertrend, suggesting resistance levels should hold if tested. The futures are moving higher, but the price remains below the USD 90.16 resistance; upside moves that reject this level will leave the futures vulnerable to further tests to the downside; above this level, the technical will have a neutral bias. Price is below all key moving averages, supported by the RSI below 50, and near-term momentum is to the buyside. A close below USD 84.30 will warn that buyside momentum is starting to weaken. Technically bearish with key resistance to follow at USD 90.16.
US HRC
December Futures – Technically bearish on the Dec contract last week, with the price looking like it could be on an Elliott wave-5. We had a note of caution due to a minor divergence with the RSI; however, if the divergence failed, it would have bearish implications in the future. The futures traded to a low of USD 623 before finding light bid support, the price is currently trading at USD 659. The positive divergence has failed, suggesting that upside moves should be considered a countertrend, as it now looks like we potentially see some form of Elliot wave extension to the downside. Upside moves that fail at or below USD 700 will leave the futures vulnerable to further tests to the downside. Above this level, the technical has a neutral bias. We now have a potential downside target of USD 535 in the near term.
Tanker TD3
December Futures – Technically bullish on the last report, potentially creating a negative divergence with the RSI on a new high. The futures traded to new highs, but so did the RSI, meaning we did not get a negative divergence, implying we see a form of a wave extension. The futures have entered a corrective phase. Downside moves that hold at or above USD 20.3010 will support a bull argument. Below this level, the technical will have a neutral bias. Only below USD 19.3480 is the technical bearish. Upside moves above USD 22.1510 have further resistance at USD 23.4076. Technically bullish, the new high on the RSI is a warning that downside moves have the potential to be countertrend from here.
Coking Coal
December Futures – Near-term price action remains bullish, with price above the 8-21 period EMA’s having made higher highs: however, from a technical perspective, the upside move looks like it could be a countertrend, as the futures remain below the USD 344 resistance. Upside moves that fail at or below this level will leave the futures vulnerable to further tests to the downside. Above this level, the technical will have a neutral bias. Upside moves above USD 327 will create a negative divergence with the RSI, not a sell signal, it does warn that we have the potential to see a momentum slowdown. Downside moves that hold at or above USD 289 will support a near-term bull argument. Below this level, we target the USD 270.50 fractal support. If we trade above USD 327, then key support is at USD 313.67. Below this level, the technical is bearish. Momentum is to the buyside, but the technical remains bearish. The potential divergence is a warning that we could see the technical weakening soon.