Commodity Weekly 29062011

8/6/2019 Commodity Weekly 29062011

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Karen Jones | Technical Analysis Research | Wednesday, 29 June 2011

Technical OutlookCommodity Weekly Technicals


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1Karen Jones | Technical Analysis Research | Wednesday, 29 June 2011

Technical Outlook

Basing. Base completes on a close above 168.50Cotton

Topping processCorn

Market collapse - what next? Looking for corrective rebound to terminate ahead of 14.18ICE ECX Emission Dec 2011

Negative bias while capped 273/74NY Coffee

Breakdown targets the 50% retracement at 1442.70Spot Gold:

Recovering in rangeLME Zinc:

Sell off exhausts ahead of the 200 day ma. Look for corrective rebound.ICE Gasoil:

200 day ma has held look for rebound/bull move to reassertNYMEX Natural Gas:

Has old off to, tested and held the 200 day ma at 2481LME Aluminium:

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

Market has bounced from key support 21431/21170 (200 week ma) and we look for further strengthLME Nickel:

Market reversed ahead of 200 day maRBOB Gasoline:

Market has sold off to 200 day ma, looking for near term reboundNYMEX Heating Oil:

Market tests and holds the 200 day ma, favour a short term reboundICE Brent Crude Oil:

Market stabilising at the 55 week ma at 88.77.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


3/27


S&P GSCI Total Return Index

S&P GSCI Total Return Index Daily Chart

200 day ma eroded, under pressure.

The S&P GSCI index has sold off through its 200 day ma,which now reverts to resistance at 4979. The market isunder pressure and our attention has reverted to the 4745

January 2010 high and the 55 week moving average at4772.

This support, ,together with the 50% retracement at 4775(of the move higher seen from mid 2010), offers strongsupport and we would look for it to hold the initial test. Thedownside measurement from the 5400-5015 rangehowever extends further to 4630.

Rallies will find previous support should act as goodresistance above 5015/42 and should remain capped bythe 55 day ma at 5332.

From a longer term perspective, following the erosion ofkey resistance offered by the 5045 2007 low, an upside

measured 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 5361

200 day ma at 4979


4/27


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

55 week ma at 4772


5/27


Nymex Light Crude Oil

NYMEX Light Crude Oil Weekly Chart

Market stabilising at the 55 week ma at 88.77.

Nymex Light Crude Oil has started to erode its 2 yearuptrend (see weekly chart ), however it has yet to register aweekly close below here (trend line currently 91.10) and is

stabilising at the 55 week ma support, which lies at 88.77.We would allow for some profit taking in this vicinity and fora corrective rebound.

Rallies will find initial resistance at 95.56, the 23.6%retracement of the recent sell off, but are likely to nowremain contained by the 55 day ma at 102.19, while

capped here immediate focus will remain on support.

We suspect that 88.77 will ultimately give way - Firstly theweekly RSI has began to break down and the market hasrecently broken down from a pennant both imply furtherlosses.

Failure to hold 88.77/55 week ma will target the 83.34/44zone, this is the 200 week ma and the 38.2% retracementof the move higher over the past 2 years.

55 week ma at

88.77


6/27


ICE Brent Crude Oil

ICE Brent Crude Oil Daily Continuation Chart

Market tests and holds the 200 day ma, favour a short term rebound

200 day ma at102.11

Brent crude oil has sold off to, tested and bounced from the200 day ma at 102.11. The market is oversold (daily RSIhas diverged) and while we would allow for a near termrebound we look for rallies to remain capped by the 55 dayma at 116.44. We would allow for a possible rebound to fillthe 116.80 gap. However This should then provoke failure..

The market has recently failed several times in the 127region and we view this as an interim top for the market.Below the 200 day ma at 102.11 we target the 55 week ma

at 95.29 then the 89.80/2 year support line.

55 day ma at 116.44

Daily RSI has

diverged.


7/27


NYMEX Heating Oil

NYMEX Heating Oil Daily Continuation Chart

Market has sold off to 200 day ma, looking for near term rebound

Heating Oil has sold off towards the 200 day ma support at2.6998 today and recovered just ahead of there. We wouldallow for a corrective pull back to 2.93/2.95 (minor Fibo

retracements), but look for the 55 day ma at 3.0327 to caprallies.

We believe the market has topped longer term and belowthe 200 day ma we would allow for the slide to extend to2.50. The 2009-2011 uptrend is not encountered until2.3890. There is potential for a slide back to here, but whilethis holds, the LONG term bullish trend will in fact remain

intact (the 55 and 200 week ma is also located in thisvicinity at 2.5364 and 2.3305).

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 theweekly charts on TD Combo, which implies that 3.3510

was the end of the up move).

55 day ma at 3.0327

200 day ma at2.6998

Daily RSI hasdiverged.


8/27


NYMEX Heating OilLonger term allow for slippage into the 2.50-23890 band

Uptrend at2.3890

Market has rejected the 3.3510resistance


9/27


ICE GasoilSell off exhausts ahead of the 200 day ma. Look for corrective rebound.

ICE Gasoil has sold off to its 200 day ma at 853, this hasheld the initial test and the market is bouncing higher. Wewould expect to see some profit taking/corrective rebound

near term.

Rallies will find initial resistance at 906/936(23.6% and38.2% retracements of the move down since April) and wewould expect the 55 day ma and resistance line at 958 and974 to hold the topside and provoke failure. While cappedhere our bias will remain negative.

Below 853 we would allow for losses to support at 800 andpotentially 747.50, the April 2009 high. The 55 week ma islocated at 799.56 and the 200 week ma lies ar 738.81, andthese offer additional supports in this zone.

Above 974 (not favoured) would re-target 1064.50 then the1075.50 August 2008 high.

ICE Gasoil Daily Continuation Chart

200 day ma at853

Resistance line at

974


10/27


NYMEX Natural Gas

Natural gas has sold off to its 200 day ma at 4.16 and heldhere, we would expect to see a decent rebound from hereas the market absorbs its recent losses. The market must

stabilise here for a neutral to bullish bias to be maintainedand re-challenge to the 5.00 and 5.1960 peaks viable (June2010 high).

Near term rallies are expected to find resistance at4.35/4.47 (23.6% and 38.2% retracements) and will need toregain this zone for another recovery to feature. The

longer term chart continues to look like it is trying to base however a close above 4.88 is needed to trigger a move to5.19/20 June high and eventually target the 5.73 200 weekmoving average.

A close below 4.15 will negate this view and signal a boutof further weakness to 4.00 and then 3.73, this years low.

NYMEX Natural Gas Daily Continuation Chart

200 day ma has held look for rebound.

200 day ma at 4.16


11/27


NYMEX RBOB Gasoline

The market sell off has ground to a halt just ahead of the200 day ma and 50% retracement support at 2.61/65. Thedivergence of the daily RSI implies a loss of downside

momentum and we would allow for a corrective reboundahead of these supports. It is possible that the market hasended its move lower and will attempt to reassert its upmove.

We suspect that the market will attempt to recover fromhere, but rallies will find initial resistance at 2.9430(resistance line) ahead of the 55 day ma at 3.0925 and

while capped here the risk will turn to the downside oncemore.

There is scope longer term for a slide to the 55 week maand 2 year uptrend at 2.47402.3630 prior to stabilising andreattempting 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

Market reversed ahead of 200 day ma

Fibo and 200

day ma at2.65/2.61

Daily RSI has

diverged.

Resistance line at

2.9430


12/27


LME Copper

LME Copper Daily Chart

Sandwiched between the 55 and 200 day ma, neutral

LME Copper is sandwiched between the 55 and 200 daymoving averages. These are located at 9028 and 9145.Currently it is the downside which looks vulnerable.

Only above 9145/9278 we would allow for an extension intothe 9546/9617 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 8552.

The 55 week ma and uptrend at 8551 and 8402 representkey support and only below here will confirm that themarket has topped.

A move above 9646 will refocus attention on the topside

and the 10000+ zone.

55 day ma at9145


13/27


LME Copper weekly chart

Key medium term supportoffered by the 55 week ma at8552 and the 2 year uptrend at

8402


14/27


LME Aluminium

LME aluminium has sold off, tested and held the 200 dayma at 2481. This suggests that we will see a near termrebound. However rallies are expected to struggle at

2619/22 (55 day ma and resistance line) to leave theoverall risk still on the downside.

The 200 day ma support at 2481 protects the moreimportant 2465/52 supports (March low and the recentlow). A close below here would be regarded as verynegative and trigger losses back to the 2 year uptrend at

2282.

LME Aluminium Daily Chart

Has old off to, tested and held the 200 day ma at 2481

Recent lows

at 2465/52

Resistance line at2622

200 day ma at2481


15/27


LME Nickel

LME Nickel has seen a strong rebound from key support at2143/21170 offered by the 200 week ma and the 38.2%retracement support of the 2009 to 2011 move. This is

encouraging, we look for this to hold the downside andprompt a recovery.

Only failure at 21170 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 23796, 24000 and will

need to regain this to re-target the short term downtrend at25436.

LME Nickel Weekly Chart

Market has bounced from key support 21431/21170 (200 week ma) and we look for further strength

200 week ma at21170


16/27


LME Zinc

LME Zinc is attempting to recover in its range and looks setto retest the 200 day ma at 2329. A close above here willinitiate further recovery to the top of the range at 2597.

Dips will support at the 2019 November 2010 low andrecent low at 2048 and directly below here lies the uptrendat 1993 (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 2597. Our longer term

outlook is neutral.

Only below 1993 will indicate that the market is breakingdown in its range.

Only a break above 2597 would target the 2736 2010 highen route to 2832.50, the 50% retracement of the move

down from 2006.

LME Zinc Weekly Chart

Recovering in range

Uptrend at 1993

Downtrend at

2597


17/27


Spot Gold

Spot Gold Daily Chart

Breakdown targets the 50% retracement at 1442.70

Spot gold has dropped through the 2011 uptrend line at1532.29 last week and now also trades below the 55 daymoving average at 1517.

The 38.2% Fibonacci retracement of this years advance at1474.54 and the May trough at 1462.10 are now beingtargeted and should be fallen through in the weeks ahead.

The 50% retracement of the 2011 advance at 1442.70 isour medium term downside target for the second half of theyear. Further down lurks the 200 day moving average at

1418, together with the 2008-11 uptrend line at 1405.93,both of which may well be hit in the months to come.

Minor resistance above the 55 day moving average at 1517is seen along the breached 2011 uptrend line at 1536 andin the 1550/1558.75 region which is where last weeks highand subsequent reversal lower was made.

We are now short- and medium-term bearish.

1-Week View

1550/1558.751442.7&1416.8

1516.5&1532.31474.54/1462.1

1-Month ViewResistanceSupport

Downside targets are seen

at 1462.10 and 1442.70


18/27


ICE ECX Emission Dec 2011Market collapse - what next?

While we had been looking for a move lower to 12.88following the break of the 2 year uptrend, we were not

expecting the market to collapse quite so spectacularly.

The move has been extremely damaging it has sold offinto 2 year lows and eroded price by 35%.

The daily RSI was oversold at 5.00 and the market iscurrently seeing a corrective rebound as the market seeks

to absorb recent losses.

Corrective rebounds will find initial resistance at 13.61ahead of 14.18, this is the 38.2% retracement of thismassive sell off. We suspect that the market rebound willnot extend beyond here. Resistance above here starts tointensify and we expect to see failure.

We have intraday support at 12.66/74. Below here willtrigger a retest of the 11.71 spike low. We have minorsupport at 11.60, the March 2009 low ahead of the10.77/78.6% retracement of the 2009-2011 move. This isregarded as the last defense of the 8.75 2009 low.

Daily


19/27


Favoured scenarioWeekly chart

Our favoured scenario is that the marketwill attempt to base 11.21/10.77 (2 year

support line and Fibo) and head backtowards 14.00.


20/27


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.


21/27


NY CoffeeNegative bias while capped 273/74

Weekly Chart

The rebound seen do far this week has

eroded the neckline of the head andshoulders top. The rebound looks quite

strong but we look for this to terminate

ahead of 273/74. For now we willmaintain a bearish bias

The rejection of price from a 36 year

resistance line recently, and thedivergence of the weekly RSI all point

to an interim peak being charted. Theslightly longer term outlook is negativeand targets 228, the 38.2%

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

and the measurement down from thetop).


22/27


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.


23/27


Corn - topping process

Weekly Chart

Looking for rallies to fail 740, 765 thiswill add weight to idea it is a potentialtop and re-target the 618/38.2%retracement


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 29062011

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