Capesize
May Futures – The index has started to move higher resulting in the futures trading up to USD 26,625, the intraday technical remains bullish whilst the daily has a neutral bias. Upside moves that fail at or below USD 28,137 remain vulnerable to further tests to the downside, above this level we target the USD 31,750 high. The index is moving higher with price at USD 16,609, meaning we have broken fractal resistance; price is now bullish based on the higher high. The issue remains with the carry as this is still at USD 9,200, price is now consolidating waiting for the disparity gap to close, we maintain our view that until the carry is around USD 4-5k the technical remains vulnerable, suggesting we need to see either a corrective pullback or further consolidation whilst the index moves higher. Any downisde moves in the index should in theory attract technical sellers to the market. Next week we will focus on the June futures as this will become the rolling front contract, we should note that the June carry is still at USD 14,891, suggesting this will also be vulnerable to technical sellers soon as it is valued at USD 31,500.
Panamax
May Futures – The futures traded to a high of USD 29,375 last week taking the technical into bullish territory; however, we are now seeing a technical pullback with price trading below the low of the 20/04, warning that support levels could be tested. Downside moves that hold at or above USD 26,322 will support a bull argument, below USD 24,750 will imply the technical could weaken further with price targeting the USD 22,750 fractal support, below this level we target the USD 16,425 low. Upside moves that trade above USD 30,750 will target the USD 33,625 high and potentially the USD 41,550 level. The futures look to be in a longer-term corrective wave-4 (Elliott wave), if we trade below USD 24,750 then the probability of the USD 22,750 support being broken will increase; if it is, then the correction is likely to be a complex corrective phase (Based on wave analysis). Likewise, if we trade above USD 30,750 and USD 33,625 then it would suggest we have entered a bullish impulse move. Technically bullish but with a neutral bias the futures are in balance, this is emphasized by the longer period EMA’s (30-60) which are currently flat, supporting neutrality. The RSI is moving below 50 (49) with the RSI moving below 70 (58), momentum is vulnerable to further tests to the downside.
Supramax
May Futures – The futures did trade back above the daily support band with price moving USD 2,850 higher to USD 33,250. We have now entered a corrective phase putting the futures into the Fibonacci support zone, downisde moves that hold at or above USD 29,912 will support a bull argument, below this level we target the USD 28,250 support, if broken the USD 26,750 level could be tested. This is a key level as it is the low of the last dominant bull wave, below this level the daily technical is bearish. We are bullish but with a corrective bias; however, like the Panamax futures we have a neutral RSI with the stochastic in overbought territory, momentum is warning that downside support levels could be tested and broken. If the RSI can hold above 50 then the faster moving stochastic is considered as less relevant. Technically bullish there are warning signs that support levels could be tested in the near-term.
Oil
June Futures – Concerns surrounding the Chinese economy and Covid, coupled with exactly how many interest rate rises we could see from the U.S this year, is putting pressure on the futures. Price had proved to be resilient into the close on Friday, we noted this as a positive on the E.U close report but warned it could be a delayed reaction, this is looking to be the case. However, the USD index has gone parabolic for the last three sessions and this likely to be unsustainable for a long period of time, if it starts to weaken we could see buying support in the market. The futures are showing a 3-wave corrective phase meaning there is the potential for a bullish Gartley pattern in play. However, if we trade below USD 97.57 then the bullish pattern will have failed, at this point we target the USD 92.90 level. Price is trading below the daily EMA support band meaning the trend is weakening, but with price flirting around the USD 101.26 support (currently USD 100.80) we remain cautious at these levels. The fundamentals are weakening but there is till a war on in Ukraine with around 30 governments globally involved as a proxy, suggesting this story could still have some twists and turns in it to come.
Iron ore
May futures – Last week the Chinese Government suggested that inflation is the focus, not stimulus. After the close on Friday price weakened by USD 3.00, warning we could be about to see market longs start to unwind, crucially the futures had closed below the daily EMA support band warning that price and sentiment were weak. A deep sell off today (Monday 25/04) has resulted in the May contract trading to a low of USD 133.25. we could see a consolidation around these levels and perhaps a small test to the upside as traders re-balance risk; however, the trend is technically bearish, supported by the RSI making a lower low, suggesting upside moves will find technical sellers. If we trade above USD 150.30 then the technical will have a neutral bias. Bearish, could consolidate, upside moves should be against the trend in the near-term.
Steel
May futures – As noted last week the futures were bearish based on the lower low, suggesting price could test the 55-period EMA at USD 1,390, the futures have traded to a low of USD 1,400 with price just below the average. Fibonacci support starts at USD 1,350, as previously noted corrective moves lower that hold at or above USD 1,169 will support a bull argument, suggesting there is a bigger Elliott wave cycle in play, below this level price will target the USD 9,47 fractal support. A close above USD 1,436 would indicate that momentum is improving based on price, warning the USD 1,490 and USD 1,602 fractal support levels could be tested. Technically bearish the RSI is at 47 with the stochastic in oversold territory, if the RSI moves above 50 whilst the stochastic is below 30 then momentum indicators would suggest that resistance levels could be tested. If the RSI holds below 50 then expect further tests to the downside.
Tanker TD3
May Futures – The futures entered a corrective phase on the last report with downside moves considered as countertrend. Price has moved below the first two support levels (USD 10.7026 – USD 10.2125) with the futures now on the 21-period EMA. Downside moves that hold at or above USD 9.5481 will support a bull argument, below this level the technical will have a neutral bias, further support is at USD 9.0248 and USD 8.1361. The RSI is above 50 with the stochastic in oversold territory, momentum is warning the futures are vulnerable to a test to the upside. The moving average is still on the RSI is still above 50 but starting to slope lower, warning resistance levels could hold if tested, upside moves that fail at or below USD 11.5386 will leave the futures vulnerable to further tests to the downside, above this level we target the USD 12,2890 high. Technically bullish but in a corrective phase, if the USD 9.5481 support holds with the RSI still above 50 then we could test resistance levels in the near-term (Resistance is at USD 10.9251, USD 11.1855, and USD 11.5386). if the RSI breaks below 50 then expect support levels to come under pressure.
Coking Coal
May Futures – The futures had a bullish Gartley pattern in play last week resulting in price trading from USD 462.50 to a high of USD 522, price has now entered a corrective phase. Downside moves that hold at or above USD 433 will support a bull argument, below this level the futures will have a neutral bias, further support is at USD 419 and USD 3,88. The RSI is at 48 with the stochastic in overbought territory, momentum is warning the technical is vulnerable to further tests to the downside, Implying downisde support levels could come under pressure. Below USD 388 the technical is bearish. Technically we are bullish but in a corrective phase, momentum would suggest we could soon be neutral and potentially bearish.