The following Commodity Futures Market Analysis is the opinion of Optimus Futures. Click on the charts below to enlarge it.
S&P 500 Index
While still holding a long term bias to the upside for this market, we had been cautioning against the more recent steep move up as market action that is potentially unsustainable. We had been targeting the 2900 and the 3000 round numbers as potential areas where major selling could come in to the market following the sharp bullish activity.
However, the market actually pulled back this week just shy of the 2900 level, marking a much needed pullback into the long term up trend. While the current bearish momentum looks strong, we have no reason to believe this market could have topped out or we are witnessing a full-fledged reversal. We continue to look at this bearish run as a mere pullback and continue to hold a long term bias to the upside for this market.
We suspect the market could potentially bounce back up around the 2700 level, if price holds at the minor former resistance at this price level as support.
Light Crude Oil
Light crude oil futures market for the week failed to post a new weekly high as the market consolidated around the long term horizontal support and resistance level at 65.
Despite the current weakness, we expect the uptrend to continue to grind forward towards the more critical support and resistance levels higher up near the 71 level and subsequently at the 75 level (marked on the chart above).
While we are seeing resistance at current price levels, we suspect a move down may well be blocked by the highs around 62.5 level that form the upper end of a consolidation box pattern.
For the short term we continue to hold an upward bias for this market.
Gold commodity futures for the week pulled back this former week after temporarily testing the recent major swing high at the 1360 price level.
While we saw prices higher than the prior swing high, we had cautioned last week that the weak close on the breakout candlestick holds little authenticity in terms of a true breakout signal, and that the market may potentially still find major resistance around the swing high at 1360.
We saw major evidence of that resistance this past week, as price pulled back down from the swing high, indicating a likely bounce off the resistance level.
If price continues with the downward momentum we expect this market to hit the major support and reistance level that falls in confluence with the 1300 major round number.
Given the strong resistance we are seeing at current price levels, we believe the likelihood of this market hitting the 1300 round number is relatively strong. For the short term we have a downward bias for this market. For the longer term this market seems to be continue consolidating in wide price ranges.
Euro currency futures for the week failed to post a new high as the market consolidated following a rather bearish hammer pattern that was posted the week prior to last one amidst resistance at the 1.25 price level.
We had cautioned last week that although the bearish hammer pattern looks authoritative (long wick on the candlestick) the more dominant bullish momentum could post higher price levels for this market again.
While we did not see any major buying come into the market this past week, the lack of bearish activity following the strong looking bearish hammer pattern appears to be a win for the bulls anyway. We suspect this market may continue to drag higher as the market nears more important longer term horizontal support and resistance levels at 1.27 and price levels beyond.
10-Year US Bonds Futures
The 10 year US Bonds futures market over the past week posted significant bearish activity reminiscent of a breakout from the all-important support zone at the 122.30 level.
Last week we had talked about some textbook technical developments on this market as price had broken under the 122.3 level and pulled back to test it again as resistance leading us to maintain a short bias for this market.
This week we had further bearish developments as the market eases into a more sustained down trend. However we do note that this market could potentially find support at subsequent price levels given that current price levels correspond to a former consolidation box posted at current price levels back in 2010-2011.
If the market continues to build on the bearish momentum, we could well see price levels near the lower end of the consolidation box – also a major former swing low that could prove as a solid support level for price.
For now, we continue to hold a short bias for this market, but will be watching the following weeks’ price action rather closely for evidence of formidable support below the 120 price level.
There is a substantial risk of loss in futures trading. Past performance is not indicative of future results.
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