Commodity Weekly 20072011

8/6/2019 Commodity Weekly 20072011

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Karen Jones | Technical Analysis Research | Wednesday, 20 July 2011

Technical OutlookCommodity Weekly Technicals


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1Karen Jones | Technical Analysis Research | Wednesday, 20 July 2011

Technical Outlook

Cotton slide is expected to stabilise at the 200 week ma at 84.52Cotton

Corn still viewed as a potential topCorn

Corrective near termICE ECX Emission Dec 2011

Negative bias while capped 273/74NY Coffee

Key day reversal suggests near term consolidation.Spot Gold:

Bid in range, capable of challenging the 2592 downtrendLME Zinc:

Continues to struggle at 994.50ICE Gasoil:

Rally should struggle 4.63/4.79NYMEX Natural Gas:

Outlook neutralised price pushing hard into key resistance at 2554/72LME Aluminium:

Remains on course for the 10190 peak.LME Copper:

Market maintains rebound from key support 21431/21091 (200 week ma) and we look for further strengthLME Nickel:

Focus remains on the 3.20 resistanceRBOB Gasoline:

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

Market consolidating below Fibo resistance at 121.72ICE Brent Crude Oil:

Price starting to erode the 55 day maNYMEX Light Crude Oil:

Well placed to challenge the 5400/02 resistanceS&P GSCI TR Index:

Short term view (1-3 weeks)Market


3/27


S&P GSCI Total Return Index

S&P GSCI Total Return Index Daily Chart

Well placed to challenge the 5400/02 resistance.

The S&P GSCI index continues to rebound off the 55 weekma at 4853 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 therebound from here has started to erode the 55 DAY ma.This has neutralised the immediate outlook and the marketis well placed to tackle the highs seen in May and June at5400/02. The market will need to regain this zone torestore upside pressure.

We are cautious at this stage the market has not quitedone enough to restore upside pressure and we areunable to rule out further consolidation and a further stabdown to 4853. Initial support is 5015.

From a longer term perspective, following the erosion ofkey resistance offered by the 5045 2007 low, an upsidemeasured target to 6124 remains in place. This will remain

the case while above the January high at 4745. Only belowhere will neutralise this outlook.

55 day ma at 5263


4/27


Nymex Light Crude Oil

NYMEX Light Crude Oil Daily Chart

Price starting to erode the 55 day ma

Nymex Light Crude Oil sidelined between the 55 and 200day moving averages at 94.23/98.52, but starting to erodethe 55 day ma. The market has rebounded from its 55

week ma support, which lies at 89.83 and while underpinned here the outlook is positive.

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 89.83/55 week ma will target the 83.73/44zone, 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 and 200 dayma at 94.15/98.61


5/27


ICE Brent Crude Oil

ICE Brent Crude Oil Daily Continuation Chart

Market consolidating below Fibo resistance at 121.72

200 day ma at

104.51

Brent crude oil is consolidating just below the 78.6%retracement resistance at 121.72.

The short term risk is that we will see the market fail hereand range sideways. Immediate support is offered by the55 day ma at 114.41, however we suspect that the marketcurrently lacks the upside impetus to clear 121.72, whichwill leave the market to drift lower in its range.

Only above 121.72 will generate upside interest to the

127 peak. Longer term it is possible that the pattern onthe weekly chart is a falling wedge and above 127 willtarget 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 day

ma 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 97.39 then the 91.02/2 year support line.

78.6% retracementat 121.72


6/27


NYMEX Heating Oil

NYMEX Heating Oil Daily Continuation Chart

Rally expected to stall 3.15/20.

Heating Oil continues to consolidate just below the3.15/3.20 region. This is the June high and the 78.6%retracement. We would allow for this to hold the initial test.

The market would need to regain this resistance for aretest of the 3.3510 level to be likely, which we again lookto hold. 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 stall at 315/320

and remain somewhat sidelined. However below the 200day ma 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 and2.3396).

Previous high at

3.1536

200 day ma at2.7583.


7/27


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

Uptrend at2.42

Market has rejected the 3.3510resistance


8/27


ICE GasoilContinues to struggle at 994.50

ICE Gasoil is consolidating below the June high at 994.50.We suspect that it may fail here and in the short term islikely to ease lower in its range towards the 200 day ma at

870.

While capped by 994.50 the risk is that the market remainssidelined and drifts back 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 is

located 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 at870.34

June high at 994.50


9/27


NYMEX Natural Gas

Natural gas has seen a strong rally higher, which hascleared the 4.41/4.42 zone and in doing so has focussedinterest once more on overhead resistance at 4.63/4.79,

the break point to the 4.9830 June high.

Intraday dips should ideally hold over 4.41 to maintain nearterm stability and a near term upside bias towards the 4.63then 4.79 levels, where we suspect the upmove willstruggle.

Below 4.41 will again neutralise the immediate outlook andallow for a slide back to 4.0770/4.064 which is againexpected to hold.

A close below 4.077 would trigger another bout ofweakness towards 3.99 then the 3.73 low. This togetherwith the 2009-2011 uptrend at 372 should hold thedownside and prompt recovery.

The longer term chart continues to look like it is trying tobase however there is a lot of work needed to regenerateupside interest. The a close above 4.88 is needed to triggera move to 5.19/20 June high and eventually target the 5.71200 week moving average.

NYMEX Natural Gas Daily Continuation Chart

Rally should struggle 4.63/4.79

200 day ma at 4.196


10/27


Crude Oil Vs Natural GasStarting to break the 2 year uptrend at 21.54

Weekly

Uptrend at 21.54being eroded

The 2 year uptrend foroutperformance of Crude Oil VsNatural Gas appears to beending


11/27


NYMEX RBOB Gasoline

The market is consolidating sideways just below the 3.20zone. A close above here is needed to confirm andreassert upside 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 and Fibo support at 2.68/65

Should support at 2.65 give way, there is scope longerterm for a slide to the 55 week ma and 2 year uptrend at2.5254/2.3990 prior to stabilising and reattempting the

topside.

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

NYMEX RBOB Gasoline Daily Continuation Chart

Focus remains on the 3.20 resistance

Fibo and 200

day ma at2.68/65

Daily RSI has

diverged.


12/27


LME Copper

LME Copper Daily Chart

Remains on course for the 10190 peak.

LME Copper has continued to inch higher. Our focusremains overhead resistance at 9945 and then 10190 2011peak.

Dips lower will find initial support at 9587/9486 but shouldhold above the 9278 May peak and the 200 day ma at9160 for immediate upside pressure to be maintained. Keysupport remains the uptrend and the 55 week ma at8717/8531.

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


13/27


LME Copper - Monthly chart

Major

divergence onthe monthlyRSI

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


14/27


LME Aluminium

LME aluminium has rallied quite strongly from the 2465/52key support (March low). We had been viewing this as apotential top but this robust rebound questions this view.

The market is at critical resistance at 2554/72. This is the 3month downtrend and the 55 day ma. The market is nowpushing hard into this resistance and it looks exposed.

A close above here will suggest that the bull move hasmanaged to reassert targeting 2668/96 en route to the2803 May high.

Failure at 2554/72 will trigger another slide towards2465/52. Failure here will see further slippage to 2009-2011 uptrend at 2307/2260, this is also the location of the200 week ma.

The immediate outlook has neutralised we are lessconvinced the market is a potential top but neither have

we overcome resistance yet to restore the up move.

LME Aluminium Daily Chart

Outlook neutralised price pushing hard into key resistance at 2554/72

Recent lows

at 2465/52

Resistance lineand 55 day ma at

2554/72


15/27


LME Aluminium - Weekly

Uptrend at 2307


16/27


LME Nickel

LME Nickel continues to rebound from key support at21431/21091 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 21091 would question thelonger term bullish bias and introduce scope for a deepersell off to 18962, then 17375, the June 2010 low.

Rallies have started to erode the 55 week ma and attention

is now focussed on the 24710 downtrend. A close abovehere will retarget 27694/29750 en route to 29425.

LME Nickel Weekly Chart

Market maintains rebound from key support 21431/21091 (200 week ma) and we look for further strength

200 week ma at21091


17/27


LME Zinc

LME Zinc looks extremely bid in its range and looks set totackle the top of its range at 2592. This is the 2008-2011resistance line.

Dips will find initial support at 2417, 2335/00 but whileabove the 2235 near term support line, an immediateupside bias is preserved in the range.

A close above 2592 would target the 2736 2010 high enroute to 2832.50, the 50% retracement of the move downfrom 2006.

Within the 2015-2592 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 2592 downtrend

Uptrend at 2015

Downtrend at

2592


18/27


Spot Gold

Spot Gold Daily Chart

Key day reversal suggests near term consolidation.

Spot gold traded in all time highs yesterday but closed below theprevious days lows this was in fact a key day reversal and atthe very least it suggests the market is in need of some

consolidation near term.

Slips should find support around the previous all-time high,made in May around 1577.50, or along the breached May-to-July resistance line at 1549.07. Further support is seen along the55 day moving average at 1527.39 and at this years support lineat 1497. Above it we will stay bullish.

Above 1610.50 lurks the 1628.84/1629.69 resistance area,

consisting of the 61.8% Fibonacci extension of this yearsadvance, projected higher from the May low, and the upper2010-11 uptrend channel resistance line.

Above it lie two vertical 15x3 Point & Figure targets at 1680 and1700, the latter of which is psychological resistance andrepresents our medium term upside target.

Still further up lurks the 100% Fibonacci extension at 1731.90.

1-Week View

1680/17001526.4&1496.6

1628.8/1629.71577.5&1549.1

1-Month ViewResistanceSupport

61.8% Fibonacci extension at 1628.84 beckons


19/27


ICE ECX Emission Dec 2011Corrective

The recent low of 11.54 was not confirmed by the dailywhich has diverged and the market is correcting highernear term.

Rallies are expected to find initial resistance at 13.11(23.6% retracement from the May peak) and remaincapped by 13.74/14.08. This is the 38.2% retracement ofthe same move and resistance above here starts tointensify and we expect this to continue to offer toughoverhead resistance.

While capped by 13.74/.14.08, the risk will remain for aretest of the 11.60/54 lows (recent low and March low)

Our favoured scenario is that the market will sell offtowards 11.17/10.77, the 78.6% retracement of the 2009-2011 move and reverse from there. This is regarded as thelast defense of the 8.75 2009 low.

Daily

RSI hasdiverged


20/27


ICE ECX Emission Dec 2011 - weekly

Weekly

Market should find supportat 11.14/10.76


21/27


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.


22/27


Cotton slide is expected to stabilise at the 200 week ma at 84.52

Weekly Continuation

The cotton market has eroded the 2 year

uptrend and 61.8% retracement of the movefrom 2001 to leave it still under pressure.

The market will remain directly offered below110.85, the November 2011 low.

We would allow for losses to extend towardsthe 200 week ma at 84.52 currently we wouldexpect to see the market stabilise and recover

from here.

There is solid 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 low

80.00 region we should see recovery towards120 for year end.

200 week ma at 84.72


23/27


Corn 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.


24/27


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 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]

Commodity Weekly 20072011

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