The following Commodity Futures Market Analysis is the opinion of Optimus Futures.
S&P 500 Index
E Mini S&P 500 index futures seems to be transforming fast from a strongly trending market to a rather sideways and choppy one. Following on the theme from the prior few weeks, price was oscillating largely around the short term support and resistance levels as neither the bulls nor bears could dominate the market.
The week started off slow and choppy and the market briefly penetrated the sharp swing lows around the 2564.00 mark before pulling back up again to erase the momentum that was built up by bears in the beginning of the week. But similar to what we have seen in the market the last few weeks, price pulled back once again to close weak and in no man’s land, straddled at the center point of a wide open range created by the prior week’s high and this week’s low.
We expect the market to remain indecisive for the coming few weeks and possibly an eventual push up to the 2600 level.
Light Crude Oil
Light crude oil futures for the December delivery contract continued to build on the bullish momentum this week, although the market is still stuck in a consolidation phase as is usually expected when price hovers near long-term swing points and highs and lows. The week started with bearish activity as price backed off long term highs, but the bulls were able to regain control in the latter half of the week to push prices higher for a close almost at par with the week’s open.
The key to this week’s market movement was the bounce off of the long term former resistance area around the 55.00 round number, which flipped to support as price hit it this week likely triggering a block of buy orders.
The momentum continues to build on the upside, and we suspect price could be gearing up to test the all time high on this market at the 58.4 level, although the importance of the location could trigger a prolonged consolidation phase for the market spanning multiple weeks.
Gold futures market for the December delivery contract was one of the most interesting to watch as it unfolded this prior week. The week took a slow start as bears pushed prices down to the support trend line, where the third touch of the trend line brought in fresh order flow, setting the tone for the following sessions.
We did see price find some resistance at the important 1290 level, as you would expect for a market that has been largely range bound for the most part.
However, the latter half of the week clearly belonged to the bulls as price not only pushed past the 1290 level but also closing strong for the week, testing the 1300 round number and possibly paving way for more bullish activity the following week.
We suspect price may initially pull back to the 1290 level during the early sessions on the back of low trading volumes, but eventually pick up momentum off the same level to progress to newer higher price levels beyond the 1300 mark.
Euro Currency Futures
Euro futures market for the December delivery contract showed more signs this week of the higher time frame head and shoulders pattern possibly failing and the market potentially transforming into a sideways market rather than a bearish one.
Price opened for the week and escalated sharply stopping for a pullback only at the 1.186 former resistance level after a rally that lasted almost more than half the week. The last part of the week was spent pulling back to the support and resistance level (and also the head and shoulders neck lone) just above the 1.17 round number.
Although we had a strong bearish close for the week, some support at this level – early next week – cannot be ruled out. And if we do hold at this level price may continue to move around more indecisively raising further questions to the once solid looking bearish head and shoulders pattern on the higher time frames.
We have had a long-term bearish bias on this market and we had our eyes set at the 1.14 round number, but we are lifting that bias given this week’s activity and our expectations of more sideways activity possible in the coming weeks.
10-Year US Treasury Futures
The 10 year US treasury futures market for the week largely followed a consolidation theme and while a good part of first half of the week belonged to the bulls, the latter half represented choppy price action. The week prior price had shown some evidence of a likely push down and perhaps evens the resumption of the longer term downtrend, but those hopes were brushed aside this week as the market once again stalled in the sideways movement patterns.
The week started at an interesting location, that is, just above the 124.5 support and resistance level that has been important to this market over the past several months. However, the slow start allowed the price to trickle down under the level, albeit on a lackluster tone, until the bulls eventually took over and bid prices as high as 125.14 for the week. Price Eventually hit resistance at a short-term support and resistance level and lost momentum to yield a rather sideways market for the remaining half of the week.
We had discussed last week how this could potentially shape up as a bearish market if the price could convincingly move down under the 124.5 area. We have yet to see that, but for now we are on the sidelines on this market.
There is a substantial risk of loss in futures trading. Past performance is not indicative of future results.
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