Commodity Weekly Technicals

Technical Outlook

Karen Jones | Technical Analysis Research | Wednesday, 20 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)

Well placed to challenge the 5400/02 resistance Price starting to erode the 55 day ma Market consolidating below Fibo resistance at 121.72 Rally expected to stall 3.15/20. Continues to struggle at 994.50 Rally should struggle 4.63/4.79 Focus remains on the 3.20 resistance Remains on course for the 10190 peak. Outlook neutralised price pushing hard into key resistance at 2554/72 Market maintains rebound from key support 21431/21091 (200 week ma) and we look for further strength Bid in range, capable of challenging the 2592 downtrend Key day reversal suggests near term consolidation. Negative bias while capped 273/74 Corrective near term Cotton slide is expected to stabilise at the 200 week ma at 84.52 Corn still viewed as a potential top

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

S&P GSCI Total Return Index

Well placed to challenge the 5400/02 resistance.
S&P GSCI Total Return Index Daily Chart
The S&P GSCI index continues to rebound off the 55 week ma 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 the rebound from here has started to erode the 55 DAY ma. This has neutralised the immediate outlook and the market is well placed to tackle the highs seen in May and June at 5400/02. The market will need to regain this zone to restore upside pressure. We are cautious at this stage the market has not quite done enough to restore upside pressure and we are unable to rule out further consolidation and a further stab down to 4853. Initial support is 5015. 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. Only below here will neutralise this outlook.

55 day ma at 5263

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

Nymex Light Crude Oil

Price starting to erode the 55 day ma
NYMEX Light Crude Oil Daily Chart
Nymex Light Crude Oil sidelined between the 55 and 200 day moving averages at 94.23/98.52, but starting to erode the 55 day ma. The market has rebounded from its 55 week ma support, which lies at 89.83 and while under pinned here the outlook is positive. 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 89.83/55 week ma will target the 83.73/44 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 and 200 day ma at 94.15/98.61

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

ICE Brent Crude Oil

Market consolidating below Fibo resistance at 121.72
ICE Brent Crude Oil Daily Continuation Chart
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 here and range sideways. Immediate support is offered by the 55 day ma at 114.41, however we suspect that the market currently lacks the upside impetus to clear 121.72, which will 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 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 97.39 then the 91.02/2 year support line.
200 day ma at 104.51 78.6% retracement at 121.72

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

NYMEX Heating Oil

Rally expected to stall 3.15/20.
NYMEX Heating Oil Daily Continuation Chart
Heating Oil continues to consolidate just below the 3.15/3.20 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 a retest of the 3.3510 level to be likely, which we again 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 stall at 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).

Previous high at 3.1536

200 day ma at 2.7583.

Karen Jones | Technical Analysis Research | Wednesday, 20 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 2.42

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

ICE Gasoil
Continues to struggle at 994.50
ICE Gasoil Daily Continuation Chart
ICE Gasoil is consolidating below the June high at 994.50. We suspect that it may fail here and in the short term is likely to ease lower in its range towards the 200 day ma at 870. While capped by 994.50 the risk is that the market remains sidelined and 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.
June high at 994.50

200 day ma at 870.34

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

NYMEX Natural Gas

Rally should struggle 4.63/4.79
NYMEX Natural Gas Daily Continuation Chart
Natural gas has seen a strong rally higher, which has cleared the 4.41/4.42 zone and in doing so has focussed interest 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 near term stability and a near term upside bias towards the 4.63 then 4.79 levels, where we suspect the upmove will struggle. Below 4.41 will again neutralise the immediate outlook and allow for a slide back to 4.0770/4.064 which is again expected to hold. A close below 4.077 would trigger another bout of weakness towards 3.99 then the 3.73 low. This together with the 2009-2011 uptrend at 372 should hold the downside and prompt recovery. 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 5.71 200 week moving average.

200 day ma at 4.196

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

Crude Oil Vs Natural Gas

Starting to break the 2 year uptrend at 21.54
Weekly

The 2 year uptrend for outperformance of Crude Oil Vs Natural Gas appears to be ending

Uptrend at 21.54 being eroded

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

NYMEX RBOB Gasoline

Focus remains on the 3.20 resistance
NYMEX RBOB Gasoline Daily Continuation Chart
The market is consolidating sideways just below the 3.20 zone. A close above here is needed 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 and Fibo support at 2.68/65 Should support at 2.65 give way, there is scope longer term for a slide to the 55 week ma and 2 year uptrend at 2.5254/2.3990 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.
Daily RSI has diverged.

Fibo and 200 day ma at 2.68/65

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

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LME Copper
Remains on course for the 10190 peak.
LME Copper Daily Chart
LME Copper has continued to inch higher. Our focus remains overhead resistance at 9945 and then 10190 2011 peak. Dips lower will find initial support at 9587/9486 but should hold above the 9278 May peak and the 200 day ma at 9160 for immediate upside pressure to be maintained. Key support remains the uptrend and the 55 week ma at 8717/8531. 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, 20 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, 20 July 2011

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LME Aluminium
Outlook neutralised price pushing hard into key resistance at 2554/72
LME Aluminium Daily Chart
LME aluminium has rallied quite strongly from the 2465/52 key support (March low). We had been viewing this as a potential top but this robust rebound questions this view. The market is at critical resistance at 2554/72. This is the 3 month downtrend and the 55 day ma. The market is now pushing hard into this resistance and it looks exposed. A close above here will suggest that the bull move has managed to reassert targeting 2668/96 en route to the 2803 May high. Failure at 2554/72 will trigger another slide towards 2465/52. Failure here will see further slippage to 20092011 uptrend at 2307/2260, this is also the location of the 200 week ma. The immediate outlook has neutralised we are less convinced the market is a potential top but neither have we overcome resistance yet to restore the up move.
Recent lows at 2465/52 Resistance line and 55 day ma at 2554/72

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

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LME Aluminium - Weekly

Uptrend at 2307

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

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LME Nickel
Market maintains rebound from key support 21431/21091 (200 week ma) and we look for further strength
LME Nickel Weekly Chart
LME Nickel continues to rebound from key support at 21431/21091 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 will maintain a neutral to positive bias. Only a weekly close below 21091 would question the longer term bullish bias and introduce scope for a deeper sell 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 above here will retarget 27694/29750 en route to 29425.

200 week ma at 21091

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

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LME Zinc
Bid in range, capable of challenging the 2592 downtrend
LME Zinc Weekly Chart
LME Zinc looks extremely bid in its range and looks set to tackle the top of its range at 2592. This is the 2008-2011 resistance line. Dips will find initial support at 2417, 2335/00 but while above the 2235 near term support line, an immediate upside bias is preserved in the range. A close above 2592 would target the 2736 2010 high en route to 2832.50, the 50% retracement of the move down from 2006. Within the 2015-2592 limits we are neutral. Only below 2000 will indicate that the market is breaking down in its range.
Downtrend at 2592

Uptrend at 2015

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

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Spot Gold
Key day reversal suggests near term consolidation.
Spot Gold Daily Chart
Spot gold traded in all time highs yesterday but closed below the previous days lows this was in fact a key day reversal and at the 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-toJuly resistance line at 1549.07. Further support is seen along the 55 day moving average at 1527.39 and at this years support line at 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 years advance, projected higher from the May low, and the upper 2010-11 uptrend channel resistance line. Above it lie two vertical 15x3 Point & Figure targets at 1680 and 1700, the latter of which is psychological resistance and represents our medium term upside target. Still further up lurks the 100% Fibonacci extension at 1731.90.
Support 1577.5&1549.1 1526.4&1496.6 Resistance 1628.8/1629.7 1680/1700 1-Week View 1-Month View

61.8% Fibonacci extension at 1628.84 beckons

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

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ICE ECX Emission Dec 2011

Corrective
Daily

The recent low of 11.54 was not confirmed by the daily which has diverged and the market is correcting higher near term. Rallies are expected to find initial resistance at 13.11 (23.6% retracement from the May peak) and remain capped by 13.74/14.08. This is the 38.2% retracement of the same move and resistance above here starts to intensify and we expect this to continue to offer tough overhead resistance. While capped by 13.74/.14.08, the risk will remain for a retest of the 11.60/54 lows (recent low and March low) Our favoured scenario is that the market will sell off towards 11.17/10.77, the 78.6% retracement of the 20092011 move and reverse from there. This is regarded as the last defense of the 8.75 2009 low.
RSI has diverged

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

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ICE ECX Emission Dec 2011 - weekly

Weekly

Market should find support at 11.14/10.76

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

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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 move from 2001 to leave it still under pressure. The market will remain directly offered below 110.85, the November 2011 low. We would allow for losses to extend towards the 200 week ma at 84.52 currently we would expect to see the market stabilise and recover from here. There is solid 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.

200 week ma at 84.72

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

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Corn 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, 20 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, 20 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, 20 July 2011