Commodity Futures Market Analysis – January 21st, 2019

Commodity Futures Market Analysis – January 21st, 2019

 

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&P500 Emini futures market last week erased more losses from last month as positive developments relating to the country’s trade relations with China continued to woo investors.

S&P Emini Commodity Futures Market Analysis January 21st 2019

The week prior to the last one, we had cited the importance of the 2600 round number as a crucial test of resistance for the market. Notably, we saw sufficient bullish momentum to see price make a confident move past that level to continue building more upside momentum last week.

We now look forward to seeing the 2600 level potentially flip into support upon a potential pull back, allowing for more buyers to jump in.

Last week, China said it had offered a six year increase in US imports into the country as a first step towards building better trade and economic relations with the US. The deal’s direct impact on the US economy is already being weighed in as experts claim it could reduce the country’s trade deficit to zero by 2024. That news backed by a still-strong US jobs market and other economic indicators are causing the market to erase much of the losses posted towards the end of 2018.

Given the fundamental developments, and the technical aspects, we see no reason to doubt more bullish activity this week yet again, provided the 2600 level does provide all the needed support to keep the bullish momentum going.

Light Crude Oil Futures (CL)

The market for crude oil also seemed to be on a fairly consistent uptrend last week as growing global stability continues to boost aggregate demand levels.

Crude Oil Commodity Futures Market Analysis January 21st 2019

Whilst major consumers of oil continue to demand more, other regions like Europe are also ramping up demand particularly for barrels coming out of the US.

On the technical front, we noted a major development last week, in that the market found formidable support at the $50 price level, setting the tone for a bullish week. While we see no signs of this momentum weakening, we also note that the market closed on Friday at a very important $54 level which has on several occasions proven to be a strong resistance level. It should be interesting to note if the market will break past this level early in the week leading from the bullish strength posted last week.

Gold Futures (GC)

The market for Gold traded at very critical price levels around the $1300 major support and resistance levels last week and unsurprisingly was not able to push past the level despite the solid push from bulls we had seen the week prior to last one.

Gold Commodity Futures Market Analysis January 21st 2019

On Friday in fact, we noticed a sharp move down possibly suggesting a bounce off the $1300 level. We say ‘possibly’ because it may well be too soon to predict a bounce off the level with the price still trading close to the level.

However, more bearish activity this week, especially in the earlier part of the week could potentially set the script for a bounce of $1300, and given the importance of this level, that would really not come off as a surprise for us.

Euro Currency Futures (6E)

Futures market for Euro remained rather tame last week yet again as neither buyers nor sellers were able to post an impression for analysts at all.

Euro Futures Commodity Futures Market Analysis January 21st 2019

At this point we have almost retired the prospects of seeing a textbook-style breakout past the wedge pattern we had identified in earlier weeks. As of right now we notice price seems to be caught between $1.155 and $1.154 support and resistance levels but is also in a broader market consolidation phase.

We await a more definitive market move to re-instate a directional bias for this market.

10 Year US Treasury Futures (TY)

The market for 10 year US treasury futures last week continued on a bear run taking heed from the strengthening US equity markets including the S&P 500 and the Dow Jones indices.

Bonds 1 Commodity Futures Market Analysis January 21st 2019

The latest bear run, triggered by the rebound off the $122 level allowed the market to close at another significant level last week i.e the $121 support and resistance level (see chart above).

The strong bearish close may be a leading indicator of potentially more selling to come into the market early this week, but given the strength of the $121 level and its potential to flip into support, we await more definitive price action and the market pulling down under the $121 level to be confident about an extended bear run for this market.

Given the strong correlation that this market has exhibited to the US equity markets, we believe a lot of the bearish potential for this market will also rely on US equity markets continuing on with the rally this week.

There is a substantial risk of loss in futures trading. Past performance is not indicative of future results. 

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