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)
Last week the S&P 500 Emini futures market was sharply bearish as prolonged fear of a potential US-China trade war and uncertainty from the Federal Reserve ate into investor confidence.
The increased levels of volatility are not helping either, as sharp swings tethered to the 2800 and the 2600 price level continue to reflect a confused state of the market.
The strong bearish activity sparked off of strong resistance at the 2800 level which allowed the market to push past the mid-range 2700 level of support and resistance with relative ease, allowing for even more sell-side pressure to dominate the market.
We note the market opening perilously close to the all-important 2600 round number and the floor of this current period of volatile consolidation, potentially threatening to put the market on a fresh round of sell-side momentum going into the end of the year. We believe that a lot will depend on the 2600 level relating to its merit as a formidable support zone. We will be carefully watching for a potential break under the 2600 level.
Light Crude Oil Futures (CL)
The market for light crude oil futures continued to consolidate at and just above the all-important $50 level, as investors weighed global over-supply concerns against efforts from oil producers to potentially curb output.
Going into this week, we notice the market opening essentially in the middle of the current short-term consolidation phase, potentially signaling the continuation of the current sideways trading theme. The lack of major bullish activity off the $50 level possibly hints at more buildup towards the downside going into the end of the current calendar year, but a lot, of course, depends on the ability of the $50 level to provide (or not provide) support to the market.
Gold Futures (GC)
The market for Gold was an interesting one to follow last week as we witnessed the market finally breaking past the crucial $1240 support and resistance level to post impressive bullish activity.
For the past several weeks we have been anticipating a potential break past the $1240 level, and finally witnessed it last week resulting from a rapid break past the level that was met with little resistance from the sellers.
We do not believe this is a win for the buyers just yet though. We see the market inching closer to yet another major potential area of resistance at the $1270 level (see chart above), which could potentially apply the brakes on the current momentum from the buyers. That said, it is encouraging to find the market continue to post higher highs and higher lows, consistent with the developments of a regular up trend.
Euro Currency Futures (6E)
The futures market for Euro continued to wind tighter into a period of consolidation last week as the $1.14 level provided decent support to the market all week, while lazy attempts from the bulls left the market still struggling for much needed impetus.
We also notice that the neatly contained price action within the wedge pattern formation (as displayed above) over the past two weeks has allowed for the market to really tighten up and should ideally be nearing a breakout point.
In fact, we are seeing the market currently trading at and about the descending resistance trend line that forms part of the wedge pattern formation. However, we fear that a bullish breakout might potentially face trouble from nearby support and resistance levels namely those found around the $1.15 and the $1.16 price levels.
10 Year US Treasury Futures (TY)
The market for 10-year US-Treasury Futures did finally break past the $119 level for a confident push to and past the $120 level, but current price levels also call for a lot of caution for buyers.
We had noticed last week that a hold above the $119 level could make for an easy pathway for the bulls to take price up to at least the $120 level – also a support and resistance level. We actually witnessed even better results, as the market penetrated the $120 level with relative ease and with little resistance from the sellers.
We do note however that the market appears to be close to $121 level of potential major resistance and an accelerating market action pushing price closer to this all-important level could trigger a selling response which we will be on the lookout for going into this week.
There is a substantial risk of loss in futures trading. Past performance is not indicative of future results.