Capesize
Jan 23 Futures – The Roll into the Jan contract has resulted in a downside breakaway gap due to the discount between the two contracts. The downside move has created a positive divergence in the futures, resulting in price finding light buying support. Upside moves that fail at or below USD 10,453 on the rolling contract will leave the futures vulnerable to further tests to the downside; above this level; the technical will have a neutral bias. When we look at the Jan futures instead of the rolling contract, we can see that price is moving higher on the back of positive divergence; if the intraday technical trades are above USD 8,000, we will target the USD 8,857 and USD 9,500 fractal resistance levels. Above USD 9,500, the USD 10,453 resistance will be vulnerable on the rolling front month technical. We are technically bearish; however, with the futures moving higher on the back of positive divergence on both the rolling contract and the outright Jan, we do not consider the price a technical sell at this point, as resistance levels look vulnerable.
Panamax
Jan 23 Futures – Like the Capesize contract, we saw a lower gap in the futures on the roll into the January contract. However, this more downward move fit in with the bearish Elliott wave cycle, as the futures remained above the USD 9,225 low from late August. We see buying support in the market on the back of a positive divergence with the RSI; upside moves that fail at or below USD 12,032 remain vulnerable to further tests to the downside; above this level, the technical will have a neutral bias. Only above USD 12,925 is the technical bullish, as this would suggest the bearish Elliott cycle has been completed. The futures remain technically bearish with a downside target of USD 9,225; if we trade above USD 12,032, it will warn that the sell-side momentum is weak, leaving the USD 12,925 resistance vulnerable.
Supramax
Jan 23 Futures – The trend remains technically bearish, with the rolling front month futures trading to a low of USD 10,750 on the back roll into Jan. the futures remain below all key moving averages, with price moving higher on the back of a positive divergence with the RSI. Upside moves that fail at or below USD 12,483 will leave the futures vulnerable to further tests to the downside; above this level; the technical will have a neutral bias. Only above USD 13,150 is the technical bullish; at this point, it would suggest that the Elliott wave cycle has been completed. The roll has made the intraday wave cycle more challenging to read; if we reject the USD 12,483 level, we could see Jan having one final test to the downside. However, we do have divergences on the intraday and daily technical, meaning we do not regard the futures as a technical sell at this point.
Oil
Feb 23 Futures – Technically bearish last week, having traded to a low of USD 80.61, we noted that we had a positive divergence in play, warning that we had the potential to see a momentum slowdown. The futures are moving higher with price trading above the trend resistance, meaning the futures are at an inflection point (we are above but are yet to close and hold above the trend resistance). The intraday technical is bullish (05/12), but the daily technical remains bearish; if we close above and hold above USD 87.60, it will warn that upside resistance levels could be tested. However, upside moves that fail at or below USD 91.37 will leave the futures vulnerable to further tests to the downside; above this level, the technical will have a neutral bias. In the near term, it does look like trend resistance could be broken (intraday price is already at USD 87.88), as the intraday RSI is above 50, whilst the stochastic is leaving the oversold territory. Momentum is warning that we could move higher, making USD 91.39 the key level to follow on the technical.
Iron Ore
Jan 23 Futures – Technically bullish last week, the upside move above USD 99.15 suggested we had started a new intraday bull cycle, meaning we had the potential to trade as high as USD 115.75. The futures have rolled into Jan but continue to increase, with price trading to a high of USD 109.00 this morning. Technically we remain bullish, with downside moves considered countertrend at this point. Corrective moves lower that hold at or above USD 98.37 will support a bull argument; below this level, the intraday technical will have a neutral bias. However, the daily technical is only considered as bearish below USD 92.90. Bullish, we maintain an upside target of USD 115.75 with a key support of USD 98.37.
Steel – USD HRC
Jan 23 – We noted last week that although technically bearish, the Dec futures looked to have completed a bearish intraday wave cycle, suggesting caution on downside moves. The Dec contract has since increased, with the price breaking the intraday high at USD 683 today. The Jan contract gapped higher on the roll but has since increased with price trading up to (but not above) the USD 740 fractal resistance. This is a key level going forward; if broken, the daily technical will have broken a key fractal high (swing high) for the first time since March, and this would take the technical into bullish territory. Technically bearish with a neutral bias, the futures look like they will soon be bullish; downside moves that hold at or above USD 670 will support a bull argument, and if broken, we target the USD 635 and 621 support levels.
Tanker TD3
Jan 23 Futures – The Dec contract was in a corrective phase last week with a price on key support; if we moved lower, it would mean the longer-term wave cycle had entered neutral territory. The futures not only became neutral, but we also entered the bearish territory. Like the Dec, the Jan futures have moved lower, with price breaking all key support levels, indicating the Jan technical is also bearish; the long-term bullish Elliott wave cycle now looks to have failed. Price is below all key moving averages supported by the RSI below 50; upside moves that fail at or below USD 19.8310 will leave the technical vulnerable to further tests to the downside; above this level, the futures will have a neutral bias. Near-term support is now between USD 14.1410 and USD 13.110; if broken, we target the USD 11.5940 level. Technically bearish, the RSI is below 50, with its moving average sloping to the downside, suggesting resistance levels should hold if tested in the near term. (Resistance – USD 17.6782, USD 18.5920, USD 19.8310).
Coking Coal
Jan 23 Futures – Technically bearish last week with futures moving higher; however, based on the depth of the downside move on the RSI, upside moves were considered countertrend. The futures continue to increase (both Dec and Jan), with prices below the Fibonacci resistance zone. Upside moves that fail at or below USD 303 (in Jan) will leave the futures vulnerable to further tests to the downside; above this level; the technical will have a neutral bias. The RSI is at 41, with the stochastic about to enter the overbought territory; momentum is warning that the futures are vulnerable to a test to the downside. However, if the RSI moves above 50, the overbought stochastic will be considered less relevant, warning that the USD 303 resistance could be tested and broken. Bearish and starting to look vulnerable.