Commodity Weekly 22062011

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    Karen Jones | Technical Analysis Research | Wednesday, 22 June 2011

    Technical OutlookCommodity Weekly Technicals

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    1Karen Jones | Technical Analysis Research | Wednesday, 22 June 2011

    Technical Outlook

    Market has severed its 2 year uptrend, break is bearishICE ECX Emission Dec 2011

    Basing. Base completes on a close above 168.50Cotton

    Under pressure, market toppedNY Coffee

    The gold price continues to look toppish despite the recent minor bounceSpot Gold:

    Under pressure in rangeLME Zinc:

    Break down from channel points to resumption of downmove.ICE Gasoil:

    Sell off is approaching the 200 day ma and uptrend, which is expected to holdNYMEX Natural Gas:

    One year uptrend at 2520 exposedLME Aluminium:

    Sandwiched between the 55 and 200 day ma, downside biasLME Copper:

    Market has sold off to key support (21431/21199 (200 week ma) and should recoverLME Nickel:

    Sell off at uptrend, Fibo and recent low at 2.8530/2.8430, favour reboundRBOB Gasoline:

    Erosion of 10 month uptrend points to further lossesNYMEX Heating Oil:

    Key week reversal puts pressure on the downside. Support at 107.36/105 is exposed.ICE Brent Crude Oil:

    Testing the 2 year uptrend at 90.64, looking for this to hold the initial test.NYMEX Light Crude Oil:

    Remains under pressure and key support at 5015/4962 remains exposedS&P GSCI TR Index:

    Short term view (1-3 weeks)Market

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    2Karen Jones | Technical Analysis Research | Wednesday, 22 June 2011

    S&P GSCI Total Return Index

    S&P GSCI Total Return Index Daily Chart

    Remains under pressure and key support at 5015/4962 remains exposed.

    The S&P GSCI index sold off last week and has againretested the 5015/4998 support (this is Fibonacci supportand the May low). It is reinforced by the 200 day ma at

    4962 and represents key support for the market.

    While we would allow for this to hold the initial test, wesuspect that this key support is now exposed and failurewill target the 4745 January 2010 high. Note the 55 weekmoving average is also found in this vicinity at 4775,together with the 50% retracement at 4775 (of the movehigher seen from mid 2010).The downside measurementform the 5400-5015 range however extend further to 4630.

    Rallies will find initial resistance at 5223 ahead of the 55day ma at 5405. Above the 55 day ma lies the 5590 Marchhigh. This is seen as the barrier to the 5780/88 March high.

    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.

    55 day ma at 5405

    38.2% retracement

    at 5015

    200 day ma at 4962

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    3Karen Jones | Technical Analysis Research | Wednesday, 22 June 2011

    S&P GSCI Total Return IndexEasing back to the 4775/55 week ma

    S&P GSCI Total Return Index Weekly Chart

    Index stalls at the 5781 Sept 2007low

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    4Karen Jones | Technical Analysis Research | Wednesday, 22 June 2011

    Nymex Light Crude Oil

    NYMEX Light Crude Oil Weekly Chart

    Testing the 2 year uptrend at 90.64, looking for this to hold the initial test.

    Nymex Light Crude Oil has sold off to, tested and held the2 year uptrend at 90.64. This is key support and we are notsurprised to see it hold however there is a question mark

    over whether or not it will provoke reversal and theresumption of the longer term bull move. It is also worthnoting that the 200 day ma is also found in this vicinity at92.30 and has held on a closing basis.

    Firstly the weekly RSI has began to break down and themarket has recently broken down from a pennant both

    imply that the uptrend is in jeopardy.

    Near term rallies will find initial resistance at 96.75 andshould remain capped by 99/100 (2 month resistance line).With the topside capped by the 55 day ma at 103.69, aneutral to negative bias is entrenched.

    Failure to hold at the 90.64 uptrend will target 88.41/55week ma then the 83.34 zone, this is the 200 week ma andthe 38.2% retracement of the move higher over the past 2years.

    Uptrend at 90.64

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    5Karen Jones | Technical Analysis Research | Wednesday, 22 June 2011

    ICE Brent Crude Oil

    ICE Brent Crude Oil Daily Continuation Chart

    Key week reversal puts pressure on the downside. Support at 107.36/105 is exposed.

    Uptrend at 107.46

    Brent crude oil has reversed and sold off sharply. Therecent rejection of price from the 121.47 peak, the key dayreversal from here places the onus on the 107.46 supportline to break and trigger another leg lower to the 105.15May low.

    We would allow for a possible rebound to fill the 116.80gap. However look for the market to remain capped by the78.6% retracement at 122.34.

    The market has recently failed several times in the 127region and we view this as an interim top for the market. Infact we suspect the market is building a large head andshoulders top this will complete on a close below 105 andsuch action would be regarded as VERY NEGATIVE.

    Below 105.00 will target the 55 week ma at 94.68.

    55 day ma has beeneroded

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    6Karen Jones | Technical Analysis Research | Wednesday, 22 June 2011

    NYMEX Heating Oil

    NYMEX Heating Oil Weekly Continuation Chart

    Erosion of 10 month uptrend points to further losses

    Heating Oil failed at 3.1536, ahead of the 3.21/the 78.6%retracement of the move down from April this implies thatrecent strength was corrective only and the market has

    now severed its 10 month uptrend at 2.9258. This isnegative.

    This adds weight to the argument that the market hastopped and leaves the market vulnerable to an evendeeper retracement towards 2.7695 then 2.50. The 2009-2011 uptrend is not encountered until 2.3785. There ispotential for a slide back to here, but while this holds, the

    LONG term bullish trend will in fact remain intact (the 55and 200 week ma is also located in this vicinity at 2.5037and 2.3219).

    The market has recently rallied to and failed at 3.3510, the3 year high and we continue to suspect the market mayhave topped here (this is 13 count on both the daily and the

    weekly charts on TD Combo, which implies that 3.3510was the end of the up move).

    Eroding the 10 month

    uptrend

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    7Karen Jones | Technical Analysis Research | Wednesday, 22 June 2011

    NYMEX Heating OilUptrend at 2.8793 is exposed

    Uptrend at2.9258

    Note weekly RSI is alreadybreaking down

    Market has rejected the 3.3510resistance

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    8Karen Jones | Technical Analysis Research | Wednesday, 22 June 2011

    ICE GasoilBreak down from channel points to resumption of downmove.

    ICE Gasoil has tested and repeatedly failed at the 992resistance. The rejection of price here, at the 61.8%retracement and the resistance line drawn from the April

    peak implies that the rally we have seen over the past 5weeks is nothing but a correction only.

    The base of the channel at 926 has been eroded and welook for this to trigger losses to the 874.50 recent low enroute to the 200 day ma at 847, then the psychologicalsupport at 800 and potentially 747.50, the April 2009 high.

    Above 982/992 (not favoured) will re-target 1064.50 thenthe 1075.50 August 2008 high. This level in turn isregarded as the break point to the 78.6% Fibonacciretracement of the sell off seen in 2008 which is located at1128.

    ICE Gasoil Daily Continuation Chart

    50%

    retracement at880

    Resistance line at

    983

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    9Karen Jones | Technical Analysis Research | Wednesday, 22 June 2011

    NYMEX Natural Gas

    Natural gas has continued to sell off from the psychological5.00 level. In fact the market charted a key day reversaland having eroded the 55 day ma has set its sights on the

    200 day ma and uptrend at 4.18/15.

    The market must stabilise here for a neutral to bullish biasto be maintained and re-challenge to the 5.00 and 5.1960peaks viable (June 2010 high).

    The longer term chart continues to look like it is trying to

    base however a close above 4.88 is needed to trigger amove to 5.19/20 June high and eventually target the 5.73200 week moving average.

    Below 4.15 will signal a bout of further weakness to 4.00and then 3.73, this years low.

    NYMEX Natural Gas Daily Continuation Chart

    Sell off is approaching the 200 day ma and uptrend, which is expected to hold

    Uptrend and 200 dayma at 4.18/4.155

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    10Karen Jones | Technical Analysis Research | Wednesday, 22 June 2011

    NYMEX RBOB Gasoline

    The market remains subdued below its 50% resistance at3.16, and focus remains on the 8 month uptrend, Fibonaccisupport and recent low at 2.8530/2.8430. This is starting to

    look exposed.

    Failure here will target the 55 week ma and 2 year uptrendat 2.4598/2.3509 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 major

    target zone for us It is a Fibonacci extension of the moveup from December 2008 to the 2010 high taken from the2010 low. Initial resistance at 3.1615/50, while capped hereattention will remain on support.

    It is possible that the market has in fact temporarily toppedat 3.50 and that the medium to longer term risk has turned

    lower. However a close below 2.84 is needed to confirm

    NYMEX RBOB Gasoline Daily Continuation Chart

    Sell off at uptrend, Fibo and recent low at 2.8530/2.8430, favour rebound

    Fibo support and low at

    2.8460/30

    Uptrend at2.8530

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    11Karen Jones | Technical Analysis Research | Wednesday, 22 June 2011

    LME Copper

    LME Copper Daily Chart

    Sandwiched between the 55 and 200 day ma

    LME Copper is sandwiched between the 55 and 200 daymoving averages. These are located at 8994 and 9178.Currently it is the downside which looks vulnerable.

    Only above 9175/9278 we would allow for an extension intothe 9546/9649 band (61.8% retracement of the sell off thisyear and 5 month resistance line).

    From a longer term perspective we are going to have toneutralise our outlook. We suspect that the market hastopped, however the recent sell off has based ahead of the

    55 week ma at 8502.

    The 55 week ma and uptrend at 8501 and 8359 representkey support and only below here will confirm that themarket has topped.

    A move above 9680 will refocus attention on the topside

    and the 10000+ zone.

    55 day ma at9178

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    12Karen Jones | Technical Analysis Research | Wednesday, 22 June 2011

    LME Copper weekly chart

    Key medium term supportoffered by the 55 week ma at8462 and the 2 year uptrend at

    8316

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

    LME Aluminium

    LME aluminium has sold off and is weighing on the oneyear uptrend at 2520. This looks exposed, failure here willtrigger a test of the 2465/52 supports (March low and the

    recent low). A close below here would be regarded as verynegative and trigger losses back to the 2 year uptrend at2273.

    Rallies are expected to find initial resistance at 2630/44ahead of the 2695/2726 (recent high and pivot line), whilecapped here we will assume downside pressures remain.

    LME Aluminium Daily Chart

    One year uptrend at 2520 exposed

    Recent lows

    at 2465/52

    Pivot line at 2726

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    14Karen Jones | Technical Analysis Research | Wednesday, 22 June 2011

    LME Nickel

    LME Nickel has sold off towards the 200 week ma at21199. This together with the 38.2% retracement supportat 21431, is expected to hold the downside, this is key

    support and should hold. Ideally we would like to see themarket base here and reattempt the topside.

    Failure at 21199 would question the longer term bullishbias and introduce scope for a deeper sell off to 18962,then 17375, the June 2010 low.

    Rallies will find initial resistance at 23720, 24000 and while

    capped here the market will remain directly offered nearterm. Above here lies the short term downtrend at 25677.

    LME Nickel Weekly Chart

    Market has sold off to key support (21431/21199 (200 week ma) and should recover

    200 week ma at21199

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    15Karen Jones | Technical Analysis Research | Wednesday, 22 June 2011

    LME Zinc

    LME Zinc has subdued below the 200 day ma resistance at2327 and is easing slowly lower.

    Dips will support at the 2019 November 2010 low andrecent low at 2048 and directly below here lies the uptrendat 1985 (see chart).

    The market is currently trading in the middle of a largerange and we are neutral. Overhead the topside is limitedby the 2008-2011 downtrend at 2599. Our longer termoutlook is neutral.

    Only below 1985 will indicate that the market is breakingdown in its range.

    Only a break above 2600 would target the 2736 2010 highen route to 2832.50, the 50% retracement of the movedown from 2006.

    LME Zinc Weekly Chart

    Under pressure in range

    Uptrend at 1985

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    16Karen Jones | Technical Analysis Research | Wednesday, 22 June 2011

    Spot Gold

    Spot Gold Daily Chart

    The gold price continues to look toppish despite the recent minor bounce

    Spot gold has bounced off the 2011 uptrend line at 1525last week but so far is being capped by the 78.6%retracement at 1552, more importantly, the current June

    high at 1554.10.

    As long as the latter caps on a daily closing basis, our shortterm bearish view will remain in place, meaning that theuptrend line should soon be fallen through.

    Just below the uptrend line meanders the 55 day movingaverage at 1513 with the May low being seen at 1462.10.

    While above this level our medium term view will staysidelined. Failure here will should trigger a sell-off to the50% retracement of the 2011 advance at 1442.70 at thevery least, though.

    In case of a new June high being made on a daily closing

    basis, the May all-time high around 1577 will be targeted.

    2011 uptrend line is to be slid through

    1-Week View

    1577.6&1600.01462.1&1442.7

    1552.9/1554.11521.8&1511.1

    1-Month ViewResistanceSupport

    Fibo resistance at 1552

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    17Karen Jones | Technical Analysis Research | Wednesday, 22 June 2011

    ICE ECX Emission Dec 2011Market has severed its 2 year uptrend, break is bearish

    The rejection of price from the 200 week ma and subsequentbreak below the 2 year uptrend is extremely bearish. The initialsell off has held over the 38.2% retracement of the 2009-2011

    move, this is located at 14.58.

    While we would allow for a small rebound from here the risk isnow for a break lower to 13.90/ December 2010 low. Andeventually 12.88 the 2010 low

    Seasonality studies reveal that that the market has a tendency tocome under pressure in the second half of the year andtherefore rebounds are likely to find resistance at 15.58 (55

    week ma). And remain contained by 16.37/50% retracement ofthe sell off seen over the past month.

    ICE ECX Emission December 2011 Weekly Chart

    2 year uptrenderoded

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    18Karen Jones | Technical Analysis Research | Wednesday, 22 June 2011

    ICE ECX Emission Dec 2011 - SeasonalitySeasonality study implies market tends to come under pressure in the second half of the year

    Market prices starts tostruggle in the second halfof the year.

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    19Karen Jones | Technical Analysis Research | Wednesday, 22 June 2011

    NY CoffeeUnder pressure, market topped

    Weekly Chart

    The market has sold off again and in

    doing so has completed an head andshoulders top.

    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 450% retracementand the measurement down from the

    top.

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    20Karen Jones | Technical Analysis Research | Wednesday, 22 June 2011

    Cotton basing. Base completes above 168.50

    Daily Continuation

    The cotton market has traded a

    number of times over the past 6weeks at the 144-142 level,

    which has held repeatedly. Short

    term the market is building apotential small base, this willcomplete on a close above168.50 and target 191.

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    Karen Jones | Technical Analysis Research | Wednesday, 22 June 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, 22 June 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]