Commodities
haven’t seen much action last week and the Bloomberg commodity index was moving sideways. There is mostly indecision in the market as investors and traders are cautious ahead
of the second round of the French election due to lack of fundamental news. Let’s
look at Crude, Grains and Sugar, technical picture reveals surprising possible
future scenarios.
Crude
The crude
market was looking for direction last week. The reason is simple – all the
fundamentals are bearish (rising US rig count, rising US production, decline in
crude inventories fully balanced by rising gasoline stock) while there is a
possible threat on the horizon as OPEC will meet in 4 weeks to decide whether
to extend the production cut or not. What is clear, the market is well supplied
and there is needed a strong impulse to motivate more buyers to jump on the
already crowded bull boat. However traders seems to be afraid ahead of the
French election. Despite a clear Macron victory is expected, there is a small
probability for negative outcome and this gives any short term trade a gambling
after taste.
Grains
The sector jumped
on weather concerns in North America and in Europe but not enough to start a
short squeeze on the money manager side. In US Midwest the extensive raining
causing sowing delays (most impact on Wheat only 22% sowing completed vs.
average 34% for this time of the year) while in Europe is opposite situation.
The European commission warned the wheat yields are threatened in many key
production regions due to dry weather. Well the only hope for bulls is in the
weather as there are huge stocks of grain almost in each part of the world.
Sugar
Falling
ethanol prices are currently one of the main drivers supporting the decline of
sugar prices. The in the middle of the Brazilian cane crushing season the mills
are more keen to produce raw sugar instead of ethanol due to the higher prices.
According to USDA bureau in Brasilia, the countries sugar production and export
will reach record levels this year despite a drop in sugar cane production. The
hopes to see new Indian duty free imports are fading and analysts forecast
strong Indian production this year while European refined sugar exports are supposed
to rise the second half of the year
.
The sugar market
has broken the psychological 16 cents as a result of long liquidation in
managed money and this triggered stops that pushed down the prices close to 15
cents per pound. However prices bounced back firmly and closed above 16 cents on
Friday. As there are no fundaments supporting the bulls, it was most likely
only profit taking and technical buying but after some times bears should take over the lead again if there is no weather surprise.
Technically
however there is a strong short term bullish picture, let’s look at the overview:
Weekly
chart: Bullish hammer, key support @ 15.36 (61.8% Fibo) rejected, Bullish divergence on
Stochastic, MACD histogram and overbought RSI & Stochastic
Daily chart: Engulfing pattern, Bullish divergence on Stochastic, RSI and triple divergence
on MACD histogram and overbought RSI and Stochastic…
...does it look bearish?
Good Luck
and remember to watch your risk and be consistent
Mr. Tech Man
DISCLAIMER:
This material was created for informational purposes only and represents the
Land of Trading team’s view of the past and current economic and capital market
environment. It is not an investment advice and should not be viewed that way
at all, and the creators of this material cannot be held liable for any
potential losses resulting from trading, where despite this disclaimer someone
would consider this material as an investment advice. All rights reserved
©2016.
Contact:
landoftradingATgmailDOTcom, Blog: landoftrading.blogspot.com
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