Capesize
Dec Futures – Technically bearish last week, the divergence with the RSI warned that we had the potential to see a momentum slow down soon. The futures moved higher, above the USD 10,604 and USD 11,675 resistance levels, meaning we are now in bullish territory. Downside moves that hold at or above USD 9,842 will support a bull argument; below this level, the futures will have a neutral bias. The futures remain below the 55-period EMA with the RSI below 50 (currently 48) whilst the stochastic is overbought territory. Momentum is a warning that the futures are vulnerable to a test to the downside, providing the RSI can stay below 50; above 50, the stochastic becomes less relevant. Technically bullish, but price and momentum are nearing resistance, the intraday RSI has made a new high implying that downside moves look to be countertrend, suggesting support levels should hold if tested.
Panamax
Dec Futures – Technically, in a bearish trending environment last week with prices below all key moving averages, both the daily and intraday RSI were in divergence, warning of the potential for a momentum slowdown. However, we noted that both the Capesize and Supramax rolling front months had traded below the August low, suggesting the Elliott wave cycle in the Panamax was lagging, implying the potential for further downside in the cycle, regardless of the divergence. The futures traded to a low of USD 11,125 before moving higher, with the price now testing the 21-period EMA; upside moves that fail at or below USD 13,270 will leave the futures vulnerable to further tests to the downside; above this level, the technical will have a neutral bias. The futures have moved higher, but we remain technically bearish due to the cycle lag; we still expect that the futures will look to trade below the August lows; however, if we trade above the USD 13,270, then the probability of the USD 9,225 low being broken will decrease (in the near-term at least) and warn that we have the potential for a more sustained upside move. Downside moves on the intraday (4-hour candle) the close below USD 12,000 will warn that the USD 11,125 support could be tested and broken. Likewise, upside moves above USD 14,375 would suggest that wave 5 of wave C may have been completed without achieving a new low.
Supramax
Dec Futures – Technically bearish last week, we had a note of caution based on the positive divergence and the wave count. The futures traded to a low of USD 11,875 before moving higher to trade up to USD 13,150. The technical now has a neutral bias due to the depth of the upside move; above USD 13,875; it will be considered bullish. Price is now trading within the 8-21 period EMA’s and starting to consolidate around the previous consolidation area that formed between 01/11 and 14/11, suggesting we are currently finding value on the technical. Due to the move higher on the back of the wave count and the consolidation, we no longer see the futures as a technical sell, as the probability of wave completion looks high, suggesting resistance levels are now vulnerable. Downside moves that trade below USD 11,875, although bearish, will create further positive divergences, implying caution going forward.
Oil
January 23 futures – Technically bearish last week based on the weekly close, supported by the EMA’s, which pointed downwards, suggesting we could be in the early stages of a bearish trending environment. The futures initially traded to a low of USD 82.31 before producing a strong rejection candle on the back of production comments from Saudi Arabia, leading us to believe that resistance levels could come under pressure; however, the upside moved rejected key resistance levels with the futures trading to new lows this morning (28/11, low USD 80.61). Technically we remain bearish with the futures in a trending environment, based on the EMA’s now pointing lower whilst well-spaced. We are, however, showing a positive divergence with the RSI, warning that we have the potential to see a momentum slowdown; the divergence will need to be monitored from now on. The intraday technical, however, implies that upside moves should be considered, as we have the potential to trade back below the USD 80.61 low, as intraday wave analysis has a downside target of USD 79.23. Technically we are a cautious bear as we are in divergence but targeting the USD 79.23 level.
Iron Ore
Dec Futures – Technically bullish last week with downside moves below USD 93.90, warning the futures were entering a corrective phase. The futures traded below the USD 93.90 level (low USD 92.90); however, we noted on the intraday technical that the price was holding above the 55-period EMA supported by the RSI above 50, with the stochastic oversold, warning we could see another test of the upside. Intraday Elliott wave analysis told us that the pullback from the 99.15 high meant we had seen a cycle completion; the new high implies we have started a new bull cycle, suggesting resistance levels are vulnerable, regardless of the intraday divergence. We had an air of caution this morning due to the social unrest in China, which could have a bearing on the wave cycle, as this is based on the psychological footprint of the market. However, the futures are again moving higher (current price USD 100.85), suggesting we have the potential to trade as high as USD 115.15 within this phase of the cycle. Technically bullish, the futures are only bearish below USD 92.90.
Steel – US HRC
December Futures – The futures traded to a high of USD 683 last week, creating an intraday double top in the market, resulting in a pullback to USD 660 today (28/11). Technically we remain bearish on the daily but bullish on the intraday, with the futures testing the intraday fractal support at USD 660; if broken, the intraday technical becomes bearish. The futures initially moved higher on a positive divergence on the intraday, with the upside move above the fractal resistance suggesting the downside cycle may have been completed. Key resistance remains unchanged at USD 699; the futures are bearish below and neutral above. However, downside moves that hold at or above USD 642 will support a near-term bull argument, leaving resistance levels vulnerable. Technically bearish on paper, we have more of a neutral bias due to the completed intraday wave cycle, as it suggests resistance levels remain vulnerable, implying caution on downside moves.
Tanker TD3
December Futures – Technically bullish last week, with price trading above the 161.8% Fibonacci extension, meaning we remained on an Extended wave 3 of this cycle phase. The futures have had a strong move to the downside with price trading below the USD 21.6831 support; we are now testing USD 19.1101 level; if broken, the longer-term technical will have a neutral bias (current price USD 19.1320). Near-term price action is bearish due to the futures making lower lows, but the longer-term Elliott wave cycle remains bullish above USD 19.1101 and neutral below. Upside moves that fail at or below USD 23.8047 will leave the futures vulnerable to further tests to the downside; above this level; we target the USD 26.2160 high. The futures look to be in a corrective wave 4; if we move any lower, this technical becomes neutral.
Coking Coal
December Futures – As previously stated, the upside move in the futures was proven to be a countertrend move, with prices moving lower over the last couple of weeks. Technically bearish, we have now broken the targeted 245.50 support (low USD 244.33), with the futures moving higher. Based on the depth of the move on the RSI, we now consider upside moves as countertrend, suggesting resistance levels should hold if tested; upside moves that fail at or below USD 299 will leave the futures vulnerable to further tests to the downside, above this level the technical will have a neutral bias.