The following Commodity Futures Market Analysis is the opinion of Optimus Futures. Click on the charts below to enlarge it.
S&P 500 Index Futures (ES)
The S&P 500 Emini futures market last week pulled down to the all-important 2600 round number where a sharp bounce propelled price back into the middle of the concurrent range.
The overall market continues to look weak with neither buyers nor sellers being able to dominate the market for long. The latest bounce off the 2600 level continues to build on higher lows that we are witnessing along with lower highs – indicating a constricting market rhythm pointing to an impending breakout.
Up until that point, we suspect the sideways market action to continue as broader market weakness retains price responsiveness to mid and long-term support and resistance levels.
Light Crude Oil Futures (CL)
Light crude oil futures market posted a new high last week as an increase in demand from some of the top oil-importing nations in the world continues to meet evidence of increasing supply, mainly from the US.
American crude oil production rose to a record 435.96 million barrels as of April 27 this year, according to data released by the EIA on Wednesday. That coupled with rising demand from top oil importing countries like India and China are the main catalysts for the bullish activity for the market.
Following a strong breakout past the $66 mark late in April, the market had been largely consolidating above the former resistance area, and last week eventually took off to re-allign with the longer term uptrend that we have been witnessing for the market for the bulk of this year.
The strong close on Friday sets the scene for possibly more buying to come into the market this week and potentially in the weeks to follow, leading us to believe the market may eventually head up to price levels beyond the $70 mark.
Gold Futures (GC)
Futures market for Gold continued to push lower for the bulk of last week, nearly touching the major 1300 round number support and resistance level, before bouncing back up in what appears to be a knee-jerk reaction from the bulls.
We continue to retain our earlier analysis for the market and expect the sideways activity to continue until we see a sustained push either past the 1300 round number, or the 1350 major resistance level that is currently acting as a ceiling for the sideways market.
The authoritative push from the sellers all the way down to near the 1300 level looked promising until late last week, when some buying came into the market, reminding us of the importance of the 1300 level.
However, an early retest of the 1300 level this week could pose an interesting scenario, possibly paving way for an eventual breakout under the 1300 level, in lieu with the recent bearish strength that this market has posted.
Euro Currency Futures (6E)
Euro currency futures continued to fall last week as negligible support from the 1.21 level allowed price to push further down to test the major 1.200 big round number.
Despite the strong activity we are witnessing from the sellers here, we are skeptical of this downward momentum as we locate multiple potential trouble areas for sellers in the vicinity (See chart above). Should price continue to drop early this week, it will likely encounter potential support from the former consolidation phase posted at current price levels back in October and November last year.
We expect a lot of friction for sellers as price pushed lower, and while we do not yet claim for an outright bounce off of current price levels, we do see price potentially stalling or consolidating at current levels as price meanders through closely knit support and resistance levels nearby.
10 Year US Treasury Futures (TY)
The market for 10-year US treasury bonds posted the highly anticipated pull back to the 120 major round number last week, although the close on Friday seems to have deployed a cozy platform for the sellers early this week.
We had expressed interest in the breakout under the 120 major round number for the market earlier, but we had also noted the lack of a definitive pull back to the 120 round number to test its role as resistance. We witnessed that pullback last week, as price dragged its way back to the round number where, on Friday selling coming in again at the level, helped print a promising bearish pin bar candlestick pattern which may provide a suitable platform for the sellers to regain momentum early this week.
While we expect the market to post some early bearish activity, we also note that as of now we do not yet have ample evidence to suggest the 120 round number has indeed flipped its role into formidable resistance yet. As we see it, we have only a single candlestick (the bearish pin bar) rebounding off the level which makes early market action this week extremely crucial to the eventual prospects of the market.
A quick push down could validate the pin bar and the new-found resistance at the 120 round number, while weakness from the sellers early on could allow price to tick higher for another retest of the 120 price level which may weaken the case for sellers overall.
There is a substantial risk of loss in futures trading. Past performance is not indicative of future results.