Commodity Weekly 13072011

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    Karen Jones | Technical Analysis Research | Wednesday, 13 July 2011

    Technical OutlookCommodity Weekly Technicals

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    1Karen Jones | Technical Analysis Research | Wednesday, 13 July 2011

    Technical Outlook

    Cotton aggressive sell has reached uptrend and FiboCotton

    Corn has reached initial target of 618, still viewed as a potential topCorn

    New low not confirmed by RSIICE ECX Emission Dec 2011

    Negative bias while capped 273/74NY Coffee

    Is about to trade into new highs. Spot Gold in Euros trades in new all-time highs above the 1100 levelSpot Gold:

    Bid in range, capable of challenging the 2593 downtrendLME Zinc:

    Rebound off 200 day ma expected to struggle 994.50ICE Gasoil:

    Neutral to slightly negative below 4.42NYMEX Natural Gas:

    Sitting on May lowLME Aluminium:

    Erosion of 5 month uptrend sees market eye the 10190 peak.LME Copper:

    Market maintains rebound from key support 21431/21115 (200 week ma) and we look for further strengthLME Nickel:

    Focus on the 3.20 resistanceRBOB Gasoline:

    Rally expected to stall 3.15/20.NYMEX Heating Oil:

    Market approaching Fibo resistance at 121.72ICE Brent Crude Oil:

    Focus on near term resistance at 99.76/103.39NYMEX Light Crude Oil:

    Rally has stalled at 55 day ma and is expected to retest support.S&P GSCI TR Index:

    Short term view (1-3 weeks)Market

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    S&P GSCI Total Return Index

    S&P GSCI Total Return Index Daily Chart

    Rally has stalled at 55 day ma and is expected to retest support.

    The S&P GSCI index saw a neat rebound off the 55 weekma at 4828 and the 4745 January 2010 high. This support,together with the 50% retracement at 4775 (of the move

    higher seen from mid 2010), offers strong support and weand not surprised that it has provoked a rebound.

    The rally has so far been thwarted by the 55 day ma at5263.This together with the highs seen in May and June at5400/02 offers tough near term resistance and we wouldallow for initial failure. The market will need to regain thiszone to restore upside pressure (this is currently notfavoured).

    We are cautious at this stage the downside measurementfrom the 5400-5015 range extends further to 4630 and weare currently unable to rule this out.

    From a longer term perspective, following the erosion of

    key resistance offered by the 5045 2007 low, an upsidemeasured target to 6124 remains in place. This will remainthe case while above the January high at 4745. Below herewill neutralise this outlook.

    55 day ma at 5263

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    3Karen Jones | Technical Analysis Research | Wednesday, 13 July 2011

    Nymex Light Crude Oil

    NYMEX Light Crude Oil Weekly Chart

    Focus on near term resistance at 99.76/103.39

    Nymex Light Crude Oil the rebound from its 55 week masupport, which lies at 89.50 is finding some resistance atthe 55 day moving average at 99.76. We would allow for

    the market to ease back towards the key weekly movingaverage as it absorbs recent moves.

    We consider key short term resistance 103.39 31st Mayhigh. We suspect that the market will struggle to gain afoothold above here on the initial test and will remain somewhat sidelined very near term. Above 103.39 is needed to

    restore upside pressure and target 110 and then114.80/117, where we would expect the market to againfail.

    Failure to hold 89.50/55 week ma will target the 83.64/44zone, this is the 200 week ma and the 38.2% retracementof the move higher over the past 2 years.

    Favoured long term scenario. While underpinned by the 55week ma the market is neutral to bullish market will haveanother attempt on the topside but is not expected tosustain a move much beyond the highs already seen.

    55 week ma at89.50

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    4Karen Jones | Technical Analysis Research | Wednesday, 13 July 2011

    ICE Brent Crude Oil

    ICE Brent Crude Oil Daily Continuation Chart

    Market approaching Fibo resistance at 121.72

    200 day ma at

    103.85

    Brent crude oil has seen a sizeable rebound over the past2 weeks however the market will shortly encounter the

    78.6% retracement resistance at 121.72.

    The short term risk is that we will see the market fail hereand range sideways.

    Only above 121.72 will generate upside interest to the127 peak. Longer term it is possible that the pattern onthe weekly chart is a falling wedge and above 127 will

    target approximately 140 longer term.

    Should we see the market fail at the 120-121.72resistance, the short term risk will shift back to thedownside. We would allow for a slide back to the 200 dayma and recent low at 103.85/102.28.

    This is key support we would again allow for it to hold.Failure here would see further slippage to the 55 week maat 96.61 then the 90.20/2 year support line.

    78.6% retracementat 121.72

    Daily RSI has

    diverged.

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    NYMEX Heating Oil

    NYMEX Heating Oil Daily Continuation Chart

    Rally expected to stall 3.15/20.

    Heating Oil has seen a strong recovery from the 200 dayma support located at 2.7398 today. We would expect tosee the market fail on rallies towards the 3.15/3.20 region.

    This is the June high and the 78.6% retracement.

    The market would need to regain this resistance for aretest of the 3.3510 level to be likely, which we gain look tohold. This is the 3 year high and we suspect that themarket may have topped here. This was a 13 count onboth the daily and the weekly charts on TD Combo.

    Currently we suspect that the market will fail 315/320 andremain somewhat sidelined. However below the 200 dayma we would allow for the slide to extend to 2.50. The2009-2011 uptrend is not encountered until 2.41. There ispotential for a slide back to here, but while this holds, theLONG term bullish trend will in fact remain intact (the 55and 200 week ma is also located in this vicinity at 2.57 and

    2.3396).

    Previous high at

    3.1536

    200 day ma at2.7398

    Daily RSI hasdiverged.

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    NYMEX Heating OilLonger term allow for slippage into the 2.50-2.41 band

    Uptrend at2.41

    Market has rejected the 3.3510resistance

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    ICE GasoilRebound off 200 day ma expected to struggle 994.50

    ICE Gasoils rebound from its 200 day ma currently at 865,has extended beyond the resistance levels that we thoughtwould cap the topside, but so far has not overcome the

    June high at 994.50. We suspect that it will struggle to doso and in the short term is likely to ease lower in its rangetowards the 200 day ma at 864.

    While capped by 994.50 the risk is that the market driftsback to the 865/ 857 support.

    Below 857 we would allow for losses to support at 800 andpotentially 747.50, the April 2009 high. The 55 week ma islocated at 810 and the 200 week ma lies at 741, and theseoffer additional supports in this zone.

    Above 994.50 would re-target 1064.50 then the 1075.50August 2008 high.

    ICE Gasoil Daily Continuation Chart

    200 day ma at864

    June high at 994.50

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    NYMEX Natural Gas

    Natural gas has traded through its 200 day ma and remainson the defensive while capped by the 55 day ma at4.41/4.42. We note the divergence of the daily RSI and we

    suspect further near term ranging will be seen. A closebelow 4.077 should be enough to trigger another bout ofweakness towards 3.99 then the 3.73 low. This togetherwith the 2009-2011 uptrend at 370 should hold thedownside and prompt recovery.

    This leaves the market neutral to negative while capped by

    4.42. Near term rallies will need to regain this zone foranother recovery to feature. The longer term chartcontinues to look like it is trying to base however there isa lot of work needed to regenerate upside interest. The aclose above 4.88 is needed to trigger a move to 5.19/20June high and eventually target the 5.72 200 week movingaverage.

    NYMEX Natural Gas Daily Continuation Chart

    Neutral to slightly negative below 4.42

    200 day ma at 4.18

    RSI hasdiverged

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    Crude Oil Vs Natural GasApproaching the 2 year uptrend at 21.43

    Weekly

    Uptrend at 21.43

    Will need to hold the 2 yearuptrend for outperformance ofCrude Oil Vs Natural Gas to bemaintained.

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    NYMEX RBOB Gasoline

    The market has seen a robust rebound ahead of the 200day ma and 50% retracement support at 2.61/66. It ispossible that the market has ended its move lower and will

    attempt to reassert its up move. However we would like tosee a close above the 3.20 zone to confirm and reassertupside interest for a retest of the 3.50/3.6310 resistance.

    While capped here the risk remains that it will fail and driftback to the 200 day ma.

    Should support at 2.61 give way, there is scope longer

    term for a slide to the 55 week ma and 2 year uptrend at2.5079/2.3870 prior to stabilising and reattempting thetopside.

    Slightly longer term we look for the market to remaincapped now by 3.50/3.6310 (the 2008 high). This is a majortarget zone for us It is a Fibonacci extension of the move

    up from December 2008 to the 2010 high taken from the2010 low.

    NYMEX RBOB Gasoline Daily Continuation Chart

    Focus on the 3.20 resistance

    Fibo and 200

    day ma at 2.66

    Daily RSI has

    diverged.

    55 day ma at 3.0770

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    11Karen Jones | Technical Analysis Research | Wednesday, 13 July 2011

    LME Copper

    LME Copper Daily Chart

    Erosion of 5 month uptrend sees market eye the 10190 peak.

    LME Copper has maintained upside pressure to erode the5 month downtrend. The close above here has caused usto adopt a more neutral to positive bias as this will place

    the 10190 2011 peak back in focus.

    Dips lower will find initial support at 9486 but should holdabove the 9278 May peak and the 200 day ma at 9120 forimmediate upside pressure to be maintained. Key supportremains the uptrend and the 55 week ma at 8664/8488.

    From a longer term perspective while we can see a

    challenge of the 10190 resistance remains on the cardsand possibly even an extension to 10339, we have ourdoubts that a further major bull move will be sustained atthis stage. We have significant divergence of the monthlyRSI and we suspect that the market does not have themomentum to sustain another major leg higher beyond101920/10339.

    Resistance

    line eroded

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    LME Copper - Monthly chart

    Major

    divergence onthe monthlyRSI

    13 Tom de Mark countregistered, thesesuccessfully called theturns in 2006 and 2008.

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    LME Aluminium

    LME aluminium has seen failure at the 55 day ma anddowntrend at 2593/77. This has provoked a retest of the2465/52 key support (March low). Currently this is exposed

    and failure here will see further slippage to 2009-2011uptrend at 2298/60, this is also the location of the 200week ma.

    We would expect this to hold the initial test and prompt anattempt to restore the upmove. Only a weekly close belowthe 200 week ma would cause us to adopt a more negative

    stance at this stage and target 2041/00.

    Near term rallies we need to clear resistance at 2593 toalleviate immediate downside pressure (not favoured) andtarget the 2695 June peak.

    LME Aluminium Daily Chart

    Sitting on the May low

    Recent lows

    at 2465/52

    Resistance line at2577

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    LME Aluminium - Weekly

    Uptrend at 2298

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    LME Nickel

    LME Nickel continues to rebound from key support at21431/21115 offered by the 200 week ma and the 38.2%retracement support of the 2009 to 2011 move. This is

    encouraging, while this under pins the market we willmaintain a neutral to positive bias.

    Only a weekly close below 21115 would question thelonger term bullish bias and introduce scope for a deepersell off to 18962, then 17375, the June 2010 low.

    Rallies will find initial resistance at 23859, 24000 (55 week

    ma) and will need to regain this to re-target the short termdowntrend at 24952, a close above here will retarget27694/29750 en route to 29425.

    LME Nickel Weekly Chart

    Market maintains rebound from key support 21431/21115 (200 week ma) and we look for further strength

    200 week ma at21115

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    LME Zinc

    LME Zinc has maintained upside pressure and looks set totackle the top of its range at 2593. This is the 2008-2011resistance line.

    Dips will find initial support at 2335/00 but while above the2217 near term support line, an immediate upside bias ispreserved in the range.

    A close above 2593 would target the 2736 2010 high enroute to 2832.50, the 50% retracement of the move downfrom 2006.

    Within the 2008-2593 limits we are neutral. Only below2000 will indicate that the market is breaking down in itsrange.

    LME Zinc Weekly Chart

    Bid in range, capable of challenging the 2593 downtrend

    Uptrend at 2008

    Downtrend at

    2593

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    17Karen Jones | Technical Analysis Research | Wednesday, 13 July 2011

    Spot Gold

    Spot Gold Daily Chart

    Is about to trade in new all-time highs

    Spot gold retests its May all-time high which is expected tobe exceeded in the very near future.

    Once a new all-time has been made, the psychological1600 region and then the upper 2010-11 uptrend channelresistance line at 1624.95 will be on the map.

    This bullish scenario has to be seen in conjunction with thegold price being expressed in euros where a new all-timehigh at 1100 has been made on Monday.

    1-Week View

    1700/1737.221522.85&1490

    1600/1624.951558.75/1550.0

    1-Month ViewResistanceSupport

    Probes its all-time high

    Weekly chart

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    Spot Gold in Euros

    Spot Gold in Euros Daily Chart

    Trades in new all-time highs above the 1100 level

    Spot gold in euros has made a new all-time high above thepsychological 1100 level on Monday.

    The impulsive rally seen off the 200 day moving average at1027.10 leads us to believe that further upside remains inthe pipeline with the 1137.4 level now being in focus. Thisis where the 100% Fibonacci extension of the mid-2010-to-late-2010 advance, projected higher from the January 2011low, comes in. Together with the psychological 1150 regionit may well act as interim resistance, though.

    Further up lurks the psychological 1200 mark and the161.8% Fibonacci extension at 1248.60, together with theminor psychological 1250 level.

    We will hold onto our medium- and long-term bullishforecasts as long as the 200 day moving average andcurrent July low at 1027.10/1026.40 underpin.

    1-Week View

    1200&1248/501057.6&1027.1

    1137.4/1150.01082.8/1068.7

    1-Month ViewResistanceSupport

    Targets the 100% Fibonacci extension at 1137.4

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    19Karen Jones | Technical Analysis Research | Wednesday, 13 July 2011

    ICE ECX Emission Dec 2011New low not confirmed by RSI

    As expected the corrective rebound failed ahead of the38.2% retracement (this is now located at 14.08.Resistance above here starts to intensify and we expect

    this to continue to offer tough overhead resistance.

    The market has spiked down to test and slightly exceed11.60, the March 2009 low. This move has beenaccompanied by a divergence of the daily RSI and thissuggests that we are likely to see some consolidation nearterm.

    Our favoured scenario is that the market will see offtowards 11.17/10.77, the 78.6% retracement of the 2009-2011 move and attempt to recover from here. This isregarded as the last defense of the 8.75 2009 low.

    Daily

    RSI hasdiverged

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    ICE ECX Emission Dec 2011 - weekly

    Weekly

    Market should find supportat 11.17/10.76

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    NY CoffeeNegative bias while capped 273/74

    Weekly Chart

    The rebound has faltered ahead of

    273/74. For now we will maintain abearish bias

    The rejection of price from a 36 yearresistance line recently, and the

    divergence of the weekly RSI all pointto an interim peak being charted. The

    slightly longer term outlook is negativeand targets 228, the 38.2%

    retracement of the move up from 2008then 204/200 (the 50% retracementand the measurement down from the

    top).Only above 274 will question that view

    and allow for a deeper retracement to292, the 78.6% retracement.

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    22Karen Jones | Technical Analysis Research | Wednesday, 13 July 2011

    Cotton aggressive sell has reached uptrend and Fibo

    Monthly Continuation

    The cotton market has seen a very aggressive

    sell off and is approaching the 2 year uptrendat 61.8% retracement of the move from 2001.

    These twin supports are located at 104.44/14.

    We would expect to see the market attempt torebound from this support however, unless

    rallies regain 142 the risk will remain on thesupports over the next 3 months.

    Failure at 104 will allow for losses to extendtowards the 200 week ma at 84.52 currently

    we would expect to see the market stabilisehere.

    There is sold support in the low 80 region andwe would expect to see the market stabilise andrecover into the year end

    Our 3 month forecast is therefore lower at 100,

    but assuming the market stabilises in the low80.00 region we should see recovery towards

    120 for year end.

    104.44/14 = Fibo and

    uptrend

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    23Karen Jones | Technical Analysis Research | Wednesday, 13 July 2011

    Corn has reached initial target of 618, still viewed as a potential top

    Weekly Chart

    Market has sold off to and held theinitial test of the 618/38.2% retracement

    We continue to look for rallies to fail740, 765 and we continue to view thepattern as a potential top. Below 618we target 562 then 506.

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    Karen Jones | Technical Analysis Research | Wednesday, 13 July 2011

    Other technical analysis reports we publish are:

    Monday: Daily Market Technicals (FX), FX Emerging Markets Technicals, Strategic Technical Themes;

    Tuesday: Daily Market Technicals (FX), Bullion Weekly Technicals;

    Wednesday: Daily Market Technicals (FX), Commodity Currencies Weekly Technicals;

    Thursday: Daily Market Technicals (FX);

    Friday: Daily Market Technicals (FX), Fixed Income Weekly Technicals.

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    Karen Jones | Technical Analysis Research | Wednesday, 13 July 2011

    Karen JonesHead of FICC Technical Analysis

    Tel. +44 207 475 1425

    Mail [email protected]

    ZentraleKaiserplatzFrankfurt am Mainwww.commerzbank.de

    Postfachanschrift60261 Frankfurt am MainTel. +49 (0)69 / 136-20Mail [email protected]

    Axel RudolphSenior FICC Technical Analyst

    Tel. +44 207 475 5721

    Mail [email protected]