The following Commodity Futures Market Analysis is the opinion of Optimus Futures. Click on the charts below to enlarge it.
Emini S&P 500 Index (ES)
The S&P 500 Emini futures market broke through the important resistance level at 2670 last week as buyers continued to build on the momentum. However, sellers dominated the market towards the end of the week, dragging price back to the 2670 level to possibly test it as support.
The major catalyst for the market was the start of the new earnings season, with corporate behemoths like JP Morgan beating on estimates, keeping buyers interested. But surprise earnings miss from some companies in the consumer staples sectors sent the market lower towards the end of the week.
The broader macroeconomic environment may also have had an impact on the American equity markets later in the week, on the back of a spike in bond yields resulting from continued concerns of rising inflation in the country.
Heading into this week, if the support at 2670 holds, we could see higher price levels for the market, although we adhere by our earlier comments relating to buyers possibly finding frequent obstacles as price possibly meanders its way north in the coming trading sessions.
Light Crude Oil Futures (CL)
Light crude oil futures market showed more signs of a sustained break past the 66 major resistance level as price pushed back to it and held as support allowing for a brief but confident rally.
The market in part benefited from major news coming from China – one of the largest oil importing country – where the private chemical producer Hengli Group said it had gained state approval to import 400,000 barrels of crude oil a day, which marks a new record for oil import quota for a domestic private refiner.
On the technical front, the market closed at fresh highs well above the 66 price level, possibly indicating at the continuation of the long term uptrend that has helped the market recover from the sharp dip seen in earlier years.
If the 66.00 price level does continue to provide support, we see price possibly climbing closer to the 75 major round number that in the past has held has formidable support for the market, and may potentially cause resistance for the market as and when it nears this level.
Gold Futures (GC)
Futures market for Gold continues to be largely indecisive as the market consistency finds a ceiling in the 1350 major resistance level.
Despite the recent multiple tests and a periodic push past the level a couple of weeks ago, buyers so far have been unable to create a sustained move past this level to possibly end the multi-month consolidation phase.
Last week, we also saw a momentary test of the level that allowed the sellers to then dominate the market for the rest of the week leaving price closing once again at the mid range of the tight zone defined by the 1350 resistance level and the 1300 round number support level.
We await more signs of the market eventually breaking through for a major move in either direction and until then expect the price to remain oscillating within the defined zone.
Euro Currency Futures (6E)
Euro currency futures last week tightened further into a possible wedge pattern formation as the sideways consolidation theme remained dominant.
Despite the mostly sideways action that we witnessed for this market for the bulk of last week, Friday’s market action was noticeably bearish as price briefly penetrated the support trend line (refer to the chart above) and eventually closed strongly bearish to mark the end of the week.
A carry on of bearish momentum earlier on this week could possibly see us pushing past the support trend line in an attempt to perhaps break out of the elongated consolidation rhythm that tightened price up in the wedge pattern formation. A bounce of the support trend line, however, could continue to constrict and squeeze price further into the wedge pattern formation indicating to a potential delayed breakout play.
10 Year US Treasury Futures (TY)
Getting hit in part by a stronger S&P 500 index and more importantly by the sudden rise in bond yields last week, the market for 10 year US treasury bonds closed sharply lower for the week, also breaking past the important support at the 120 major round number.
We had been talking about price holding as resistance at the mid-term 120.5 horizontal support and resistance level. Last week, price continued to find resistance at this level and pushed sharply lower also creating a new low for the market as it printed price levels unseen since April 2011.
Fresh air strikes on Syria and rising concerns of an inflationary business environment in the country weighed down on government bonds last week, sending bond yields higher and price lower. The impetus from the sellers further allowed the market to break past the major 120 round number that had earlier halted a longer term downtrend for the market.
With some fresh selling entering the market we could possibly see the resumption of the long term downtrend, should the sellers remain in control this week.
There is a substantial risk of loss in futures trading. Past performance is not indicative of future results.
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