The following Commodity Futures Market Analysis is the opinion of Optimus Futures. Click on the charts below to enlarge it.
S&P 500 Index
Emini S&P 500 index futures market for the week sustained the bullish momentum, posting a new all-time high yet again with no major signs of exhaustion.
We do however note that in the broader picture we are witnessing a regular uptrend – marked with periodic non-threatening pull backs – convert into a rather steep one with very few pullbacks, especially in the past couple of weeks. We believe that such strong momentum may be hard for the market to sustain, which could eventually result in the inevitable pullback.
We do not believe that the market could be nearing a top or aiming for a full reversal, but we would like to issue caution for people wanting to position long trades in a market sitting at all-time highs riding a very steep price move.
Light Crude Oil
Light crude oil futures market barely created a new high for the week as the market spent most of the weekly session consolidating following the sharp move up the week prior.
Notably though, we do not find the current consolidation phase to be threatening or in any way indicative of a market top. That reasoning stems from the recent candlestick formations that do not appear to be very bearish and the major support area falling just underneath current price levels that should cushion a pullback and may allow for the resumption of the uptrend. That level at 6200, marks the top of a former consolidation box that could prove as an authoritative support area for price upon a pull back. Our long term bias for this market continues to be bullish for the short to midterm.
Gold commodity futures for the week inched closer to the high at 1358, although the market closed at an interesting location that marks a confluence of multiple resistance areas.
Current price levels fall in line with a resistance trend line that could possibly be a part of a wedge pattern formation (deep red dotted lines on the chart above), as well as the mid-range of a former consolidation box that has already proven to be a profound source of resistance for price earlier.
We suspect price could find some major resistance at current price levels, although we do not yet believe in a full-fledged reversal or a sustained bounce off current price levels. That may be partly because former resistance at the 1300 level could well turn into support and jeopardize any major bearish activity allowing for bulls to regain control.
While we wait for more definitive price action at key current price levels, we are on the sidelines for this market for now.
Euro currency futures built some strong bullish momentum as price pushed further away from the 1.2 major round number, although historic former support and resistance levels could provide regular hurdles for bulls.
Following the breakout above the 1.2 round number, price spent the latter half of last week consolidating, although we are hopeful that former resistance just above 1.2 may turn into support should price trickle back down.
In the broader picture however, we suspect price may be headed to the crucial 1.27 major support and resistance level, although we note that the ride up that level may not be entirely smooth, given the frequent pullbacks and sideways market movement that this this market has been accustomed to in the last few months.
We nevertheless continue to have a long bias on this market given the underlying technical strength from the bulls indicated by the strong breakout of the 1.2 round number.
10-Year US Treasury Futures
The 10 year US Bonds futures market over the past week made decisive price movements under the crucial 122.5 support level, possibly indicating the foundations of a more dominant and sustained down trend.
We note strong bearish candlesticks in the latter half of last week, possibly indicating a strong break to the down side of the more swing lows marking the end to the extended period of sideways and choppy market action.
While the market is yet to clear an important swing low posted near 122.18 in 2013, any support coming in at that price level could be capped by the 122.5 level – that now broken to the downside, may act as solid resistance for price.
While we will watch for indication of support near 122.18, we continue to hold a bearish bias for this market given the strong breakout dynamics that we see at play here.
There is a substantial risk of loss in futures trading. Past performance is not indicative of future results.