Commodity Weekly Technicals

Technical Outlook

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

Technical Outlook
Market
S&P GSCI TR Index: NYMEX Light Crude Oil: ICE Brent Crude Oil: NYMEX Heating Oil: ICE Gasoil: NYMEX Natural Gas: RBOB Gasoline: LME Copper: LME Aluminium: LME Nickel: LME Zinc: Spot Gold: NY Coffee ICE ECX Emission Dec 2011 Cotton Corn

Short term view (1-3 weeks)

Rally has stalled at 55 day ma and is expected to retest support. Focus on near term resistance at 99.76/103.39 Market approaching Fibo resistance at 121.72 Rally expected to stall 3.15/20. Rebound off 200 day ma expected to struggle 994.50 Neutral to slightly negative below 4.42 Focus on the 3.20 resistance Erosion of 5 month uptrend sees market eye the 10190 peak. Sitting on May low Market maintains rebound from key support 21431/21115 (200 week ma) and we look for further strength Bid in range, capable of challenging the 2593 downtrend Is about to trade into new highs. Spot Gold in Euros trades in new all-time highs above the 1100 level Negative bias while capped 273/74 New low not confirmed by RSI Cotton aggressive sell has reached uptrend and Fibo Corn has reached initial target of 618, still viewed as a potential top

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

S&P GSCI Total Return Index

Rally has stalled at 55 day ma and is expected to retest support.
S&P GSCI Total Return Index Daily Chart
The S&P GSCI index saw a neat rebound off the 55 week ma 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 we and not surprised that it has provoked a rebound. The rally has so far been thwarted by the 55 day ma at 5263.This together with the highs seen in May and June at 5400/02 offers tough near term resistance and we would allow for initial failure. The market will need to regain this zone to restore upside pressure (this is currently not favoured). We are cautious at this stage the downside measurement from the 5400-5015 range extends further to 4630 and we are currently unable to rule this out. From a longer term perspective, following the erosion of key resistance offered by the 5045 2007 low, an upside measured target to 6124 remains in place. This will remain the case while above the January high at 4745. Below here will neutralise this outlook.

55 day ma at 5263

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

Nymex Light Crude Oil

Focus on near term resistance at 99.76/103.39
NYMEX Light Crude Oil Weekly Chart
Nymex Light Crude Oil the rebound from its 55 week ma support, which lies at 89.50 is finding some resistance at the 55 day moving average at 99.76. We would allow for the market to ease back towards the key weekly moving average as it absorbs recent moves. We consider key short term resistance 103.39 31st May high. We suspect that the market will struggle to gain a foothold above here on the initial test and will remain some what sidelined very near term. Above 103.39 is needed to restore upside pressure and target 110 and then 114.80/117, where we would expect the market to again fail. Failure to hold 89.50/55 week ma will target the 83.64/44 zone, this is the 200 week ma and the 38.2% retracement of the move higher over the past 2 years. Favoured long term scenario. While underpinned by the 55 week ma the market is neutral to bullish market will have another attempt on the topside but is not expected to sustain a move much beyond the highs already seen.
55 week ma at 89.50

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

ICE Brent Crude Oil

Market approaching Fibo resistance at 121.72
ICE Brent Crude Oil Daily Continuation Chart
Brent crude oil has seen a sizeable rebound over the past 2 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 here and range sideways. Only above 121.72 will generate upside interest to the 127 peak. Longer term it is possible that the pattern on the weekly chart is a falling wedge and above 127 will target approximately 140 longer term. Should we see the market fail at the 120-121.72 resistance, the short term risk will shift back to the downside. 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 ma at 96.61 then the 90.20/2 year support line.
Daily RSI has diverged.

78.6% retracement at 121.72

200 day ma at 103.85

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

NYMEX Heating Oil

Rally expected to stall 3.15/20.
NYMEX Heating Oil Daily Continuation Chart
Heating Oil has seen a strong recovery from the 200 day ma support located at 2.7398 today. We would expect to see 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 a retest of the 3.3510 level to be likely, which we gain look to hold. This is the 3 year high and we suspect that the market may have topped here. This was a 13 count on both the daily and the weekly charts on TD Combo. Currently we suspect that the market will fail 315/320 and remain somewhat sidelined. However below the 200 day ma we would allow for the slide to extend to 2.50. The 2009-2011 uptrend is not encountered until 2.41. There is potential for a slide back to here, but while this holds, the LONG term bullish trend will in fact remain intact (the 55 and 200 week ma is also located in this vicinity at 2.57 and 2.3396).
Daily RSI has diverged.

Previous high at 3.1536

200 day ma at 2.7398

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

NYMEX Heating Oil

Longer term allow for slippage into the 2.50-2.41 band
Market has rejected the 3.3510 resistance

Uptrend at 2.41

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

ICE Gasoil
Rebound off 200 day ma expected to struggle 994.50
ICE Gasoil Daily Continuation Chart
ICE Gasoils rebound from its 200 day ma currently at 865, has extended beyond the resistance levels that we thought would cap the topside, but so far has not overcome the June high at 994.50. We suspect that it will struggle to do so and in the short term is likely to ease lower in its range towards the 200 day ma at 864. While capped by 994.50 the risk is that the market drifts back to the 865/ 857 support. Below 857 we would allow for losses to support at 800 and potentially 747.50, the April 2009 high. The 55 week ma is located at 810 and the 200 week ma lies at 741, and these offer additional supports in this zone. Above 994.50 would re-target 1064.50 then the 1075.50 August 2008 high.
200 day ma at 864 June high at 994.50

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

NYMEX Natural Gas

Neutral to slightly negative below 4.42
NYMEX Natural Gas Daily Continuation Chart
Natural gas has traded through its 200 day ma and remains on the defensive while capped by the 55 day ma at 4.41/4.42. We note the divergence of the daily RSI and we suspect further near term ranging will be seen. A close below 4.077 should be enough to trigger another bout of weakness towards 3.99 then the 3.73 low. This together with the 2009-2011 uptrend at 370 should hold the downside and prompt recovery. This leaves the market neutral to negative while capped by 4.42. Near term rallies will need to regain this zone for another recovery to feature. The longer term chart continues to look like it is trying to base however there is a lot of work needed to regenerate upside interest. The a close above 4.88 is needed to trigger a move to 5.19/20 June high and eventually target the 5.72 200 week moving average.

200 day ma at 4.18

RSI has diverged

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

Crude Oil Vs Natural Gas

Approaching the 2 year uptrend at 21.43
Weekly

Will need to hold the 2 year uptrend for outperformance of Crude Oil Vs Natural Gas to be maintained.

Uptrend at 21.43

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

NYMEX RBOB Gasoline

Focus on the 3.20 resistance
NYMEX RBOB Gasoline Daily Continuation Chart
The market has seen a robust rebound ahead of the 200 day ma and 50% retracement support at 2.61/66. It is possible that the market has ended its move lower and will attempt to reassert its up move. However we would like to see a close above the 3.20 zone to confirm and reassert upside interest for a retest of the 3.50/3.6310 resistance. While capped here the risk remains that it will fail and drift back 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 at 2.5079/2.3870 prior to stabilising and reattempting the topside. Slightly longer term we look for the market to remain capped now by 3.50/3.6310 (the 2008 high). This is a major target zone for us It is a Fibonacci extension of the move up from December 2008 to the 2010 high taken from the 2010 low.
Fibo and 200 day ma at 2.66 55 day ma at 3.0770

Daily RSI has diverged.

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

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LME Copper
Erosion of 5 month uptrend sees market eye the 10190 peak.
LME Copper Daily Chart
LME Copper has maintained upside pressure to erode the 5 month downtrend. The close above here has caused us to 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 hold above the 9278 May peak and the 200 day ma at 9120 for immediate upside pressure to be maintained. Key support remains 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 cards and possibly even an extension to 10339, we have our doubts that a further major bull move will be sustained at this stage. We have significant divergence of the monthly RSI and we suspect that the market does not have the momentum to sustain another major leg higher beyond 101920/10339.

Resistance line eroded

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

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LME Copper - Monthly chart

13 Tom de Mark count registered, these successfully called the turns in 2006 and 2008.

Major divergence on the monthly RSI

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

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LME Aluminium
Sitting on the May low
LME Aluminium Daily Chart
LME aluminium has seen failure at the 55 day ma and downtrend at 2593/77. This has provoked a retest of the 2465/52 key support (March low). Currently this is exposed and failure here will see further slippage to 2009-2011 uptrend at 2298/60, this is also the location of the 200 week ma. We would expect this to hold the initial test and prompt an attempt to restore the upmove. Only a weekly close below the 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 to alleviate immediate downside pressure (not favoured) and target the 2695 June peak.
Recent lows at 2465/52 Resistance line at 2577

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

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LME Aluminium - Weekly

Uptrend at 2298

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

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LME Nickel
Market maintains rebound from key support 21431/21115 (200 week ma) and we look for further strength
LME Nickel Weekly Chart
LME Nickel continues to rebound from key support at 21431/21115 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 will maintain a neutral to positive bias. Only a weekly close below 21115 would question the longer term bullish bias and introduce scope for a deeper sell 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 term downtrend at 24952, a close above here will retarget 27694/29750 en route to 29425.

200 week ma at 21115

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

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LME Zinc
Bid in range, capable of challenging the 2593 downtrend
LME Zinc Weekly Chart
LME Zinc has maintained upside pressure and looks set to tackle the top of its range at 2593. This is the 2008-2011 resistance line. Dips will find initial support at 2335/00 but while above the 2217 near term support line, an immediate upside bias is preserved in the range. A close above 2593 would target the 2736 2010 high en route to 2832.50, the 50% retracement of the move down from 2006. Within the 2008-2593 limits we are neutral. Only below 2000 will indicate that the market is breaking down in its range.
Downtrend at 2593

Uptrend at 2008

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

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Spot Gold
Is about to trade in new all-time highs
Spot Gold Daily Chart
Spot gold retests its May all-time high which is expected to be exceeded in the very near future. Once a new all-time has been made, the psychological 1600 region and then the upper 2010-11 uptrend channel resistance line at 1624.95 will be on the map. This bullish scenario has to be seen in conjunction with the gold price being expressed in euros where a new all-time high at 1100 has been made on Monday.
Weekly chart Probes its all-time high

Support 1558.75/1550.0 1522.85&1490

Resistance 1600/1624.95 1700/1737.22

1-Week View

1-Month View

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

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Spot Gold in Euros

Trades in new all-time highs above the 1100 level
Spot Gold in Euros Daily Chart
Spot gold in euros has made a new all-time high above the psychological 1100 level on Monday. The impulsive rally seen off the 200 day moving average at 1027.10 leads us to believe that further upside remains in the pipeline with the 1137.4 level now being in focus. This is where the 100% Fibonacci extension of the mid-2010-tolate-2010 advance, projected higher from the January 2011 low, comes in. Together with the psychological 1150 region it may well act as interim resistance, though. Further up lurks the psychological 1200 mark and the 161.8% Fibonacci extension at 1248.60, together with the minor psychological 1250 level. We will hold onto our medium- and long-term bullish forecasts as long as the 200 day moving average and current July low at 1027.10/1026.40 underpin.
Targets the 100% Fibonacci extension at 1137.4

Support 1082.8/1068.7 1057.6&1027.1

Resistance 1137.4/1150.0 1200&1248/50

1-Week View

1-Month View

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

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ICE ECX Emission Dec 2011

New low not confirmed by RSI
Daily

As expected the corrective rebound failed ahead of the 38.2% 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 exceed 11.60, the March 2009 low. This move has been accompanied by a divergence of the daily RSI and this suggests that we are likely to see some consolidation near term. Our favoured scenario is that the market will see off towards 11.17/10.77, the 78.6% retracement of the 20092011 move and attempt to recover from here. This is regarded as the last defense of the 8.75 2009 low.

RSI has diverged

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

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ICE ECX Emission Dec 2011 - weekly

Weekly

Market should find support at 11.17/10.76

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

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NY Coffee
Negative bias while capped 273/74
Weekly Chart The rebound has faltered ahead of 273/74. For now we will maintain a bearish bias The rejection of price from a 36 year resistance line recently, and the divergence of the weekly RSI all point to an interim peak being charted. The slightly longer term outlook is negative and targets 228, the 38.2% retracement of the move up from 2008 then 204/200 (the 50% retracement and the measurement down from the top). Only above 274 will question that view and allow for a deeper retracement to 292, the 78.6% retracement.

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

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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 uptrend at 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 to rebound from this support however, unless rallies regain 142 the risk will remain on the supports over the next 3 months. Failure at 104 will allow for losses to extend towards the 200 week ma at 84.52 currently we would expect to see the market stabilise here. There is sold support in the low 80 region and we would expect to see the market stabilise and recover 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 towards 120 for year end. 104.44/14 = Fibo and uptrend

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

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

Market has sold off to and held the initial test of the 618/38.2% retracement We continue to look for rallies to fail 740, 765 and we continue to view the pattern as a potential top. Below 618 we target 562 then 506.

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

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Other technical analysis reports we publish are:

Monday: Tuesday: Wednesday: Thursday: Friday: Daily Market Technicals (FX), FX Emerging Markets Technicals, Strategic Technical Themes; Daily Market Technicals (FX), Bullion Weekly Technicals; Daily Market Technicals (FX), Commodity Currencies Weekly Technicals; Daily Market Technicals (FX); Daily Market Technicals (FX), Fixed Income Weekly Technicals.

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

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Karen Jones
Head of FICC Technical Analysis Tel. Mail +44 207 475 1425 karen.jones@commerzbank.com

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