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 traded within a very narrow range in a dull phase of trading last week as it consolidates after breaking past the wedge pattern early on.
Last week we analyzed how the move past the wedge pattern formation appears to be refreshing after a prolonged period of sideways trading activity. Yet we noticed that the market had failed to post an initial or a delayed pullback to the breakout point, which technical traders typically expect and rely on for market entries.
We could potentially be seeing the market gear up for that anticipated pullback early this week as the market retraces back to around the 2680 price level. However, given how a pullback at this stage will also reflect the market rebounding off the swing high at 2715, we are also considering the possibility of the market remaining within a choppy trading environment if a rebound back into the direction of the breakout does not push past the resistance at the 2715 level.
We nevertheless remain optimistic about this market, and given the bullish breakout scenario, we continue to expect more buying in general to come into the market this week.
Light Crude Oil Futures (CL)
Light crude oil futures market also posted a dull phase of trading last week, and while we saw the market push to newer highs, strong bullish daily candlesticks that are typically associated with a solid up trend were missing from last week’s trading activity.
However, we do not see any major indications to doubt our bullish bias for the market and continue to anticipate the market to tick higher in the coming days as it inches closer to the all-important price levels around $75 and above that line up with long term swing lows that could potentially cause significant resistance for the concurrent up trend.
Gold Futures (GC)
Futures market for Gold made an interesting move last week, finally pushing under the 1300 major round number.
We note, however, that even though the market closed strongly bearish on Friday, the close itself sits at a more thick range of price levels that combine to form the horizontal support and resistance level at the around the 1300 round number.
While we are optimistic about the breakout past the consolidation phase and the 1300 round number, we also caution against the market’s probability of a bounce off of current price levels, especially given the overall choppy trading conditions that this market has posted over the past several months.
Euro Currency Futures (6E)
Euro currency futures continued to push lower last week, despite the ominous presence of a former period of consolidation that we still believe could provide support and friction for sellers.
We did see the market holdup at the 1.188 price level in the week prior to last one, but that really proved to be a simple retest of the 1.200 big round number that held as solid resistance and allowed for sellers to regain control for the bulk of last week.
However, we continue to see trouble for sellers ahead as marked out by the horizontal support and resistance levels in close proximity to current price levels (see chart above). But if sellers retain the strength that we have witnessed in the past week, the market may push down to test the swing low at 1.16 and possibly lower price levels. While we remain open to that possibility, we still suspect some trouble for sellers at the 1.172 level first.
10 Year US Treasury Futures (TY)
The market for 10 year US treasury bonds created a new low last week as the bearish run continues, but looking at the larger picture makes us rather skeptical on the continuation prospects of the seemingly strong down trend.
We seem to have the down trend intact, with the market consistently pushing past prior swing lows to create new lower lows and lower highs which are typical of a strong down trend. But as we zoom out into the bigger picture, we see elements of long term support at current price levels that could bring in a large influx of buy orders.
The market appears to be perilously close to the 118 major price level which last saw the market unfold a long term bullish up trend back in 2011. As the market nears that important price level (and the price levels around it) we suspect a potential reaction from the buyers. And while we don’t have any price action indications to suggest that an entry from the bulls at these price levels could be just as dramatic as back in 2011, we do expect at least some major friction for the sellers at and around the 118 price level.
There is a substantial risk of loss in futures trading. Past performance is not indicative of future results.