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 showed signs of a potential breakout past the consolidation phase contained within a well-defined wedge pattern.
Helped largely by the continued optimism from investors and a refreshingly positive earnings season, the market continues to propel upwards, potentially signaling a highly anticipated breakout above the resistance trend line that was part of the wedge pattern (see chart above).
We are increasingly positive seeing the strong bullish activity on Friday as the market closed above the key 2715 resistance area that could potentially turn into support and allow a fresh launch pad for bulls early this week.
While the notable strength from the bulls and the breakout witnessed last week point to more potential strength from the bulls, we prefer to go back to our textbooks that remind us of the fairly common market phenomena of price pulling back to the breakout point following the initial breakout. If we do see a pullback, we believe the 2680 price level (marked by the orange rectangle in the chart above) could be the platform where we could potentially see some fresh buying come into the market as the bullish activity resumes.
Despite our expectations of a possible pullback early this week, we remain largely behind the recent strength from the bulls and expect higher price levels for this market in the coming weeks.
Light Crude Oil Futures (CL)
Light crude oil futures market continues to gain from some major geo-political developments in the global economy, mainly US President Trump’s recent decision to re-impose Iran sanctions.
Last week, we witnessed market pulling back to $68 price level and rebounding sharply back up, allowing buyers to take control for the bulk of the week. The overall bullish strength helped the market post yet another new multi-month high as well as push past the important $70 round number, although a minor retracement on Friday points to a possible pullback to the $70 round number early this week.
We continue to hold our long bias for this market and also our longer term expectations from the market to hit the key $75 price level.
Gold Futures (GC)
The futures market for Gold consolidated above the 1300 major round number and key support level for the market last week prolonging the market’s activity within the well-defined channel marked by the 1300 round number and 1350 resistance level.
We continue to eye a breakout past either of the two extremes of the channel as a step towards a more trending market rhythm, but until then we suspect for this sideways market activity to continue.
Given current price level’s proximity to the 1300 round number and support level, another quick retest of the 1300 level early this week could strengthen the case for bears, while a strong rally from the buyers could neutralize the market further or perhaps tip it in favor of the bulls if price nears the 1350 resistance level yet again.
Euro Currency Futures (6E)
Euro currency futures seems to have stabilized after the sharp bear run the week prior to the last one when the market had broken out of a prolonged consolidation phase.
Even as we saw strong selling in the market, we have been cautioning against the likelihood of knee-jerk reactions and rebounds off several notable support and resistance levels to the immediate left centered at the 1.2 major round number.
We witnessed part of that development last week, as the market pulled back after hitting the notable support at 1.19. We also note that the sharp move down from the sellers earlier on provides for a smoother path back for the bulls should they continue to build on the momentum found at the 1.19 level. If the market does create a more extended pullback or rebound off this level, we see no major resistance for the market before the former swing low at 1.22.
10 Year US Treasury Futures (TY)
The market for 10 year US treasury bonds largely consolidated last week, after having broken below the major 120 round number the week prior to last.
The start of last week clearly belonged to the sellers as they benefited from the momentum created by some fresh selling coming in at the pullback point to the 120 major round number. However, the momentum did seem to phase out in the latter part of the week, halting the market’s attempts to create a fresh low.
We continue to remain sellers of this market and expect lower price levels and fresh lows possibly this week and in the weeks to come.
There is a substantial risk of loss in futures trading. Past performance is not indicative of future results.