- Commodities are moving above the 200 DMA
- Agricultural commodities look great
- Oil pauses at $50
- Natural Gas looks at $3 resistance above
A good example of the Agricultural commodity breakout is Coffee (Jo). After basing for a long period of time, this continues to test the top of the range with each push causing more participation and then it pulls back. Due to the volatile nature, this might require a starting position near the lows as the breakouts continue pull back enough to kick in the stops.
There are a lot of great agricultural charts this week. Here is the Webinar Skim.
"Commodities Countdown LIVE!" with Greg Schnell - 2016-06-09 17:00 from StockCharts.com on Vimeo.
Webinar // $CRB Components 0:00 // Commodity Indexes 13:00 // XLE, CRAK, FRAK, 18:00 // Uranium 21:00 // Oil 21:00 // Q & A 24:00 // Natural Gas 38:00 // Gold And Silver 40:00 // China and India 46:00 // Coffee 55:00 // Strong ETF's 56:00 //
For another example of Agriculture commodities, $WHEAT is starting to get that golden sheen. We now have a trend of higher lows and higher highs on the weekly chart. The relative strength in purple has broken a 2-year downtrend. The price action has started to improve. There is still a major test at the big blue downtrend line. With the rest of the commodities breaking through resistance this looks powerful enough to break out.
Oil continues to work around the $50 level. I have drawn major horizontal support/ resistance around the $47.50 level. With Thursday's reversal from $51.00, that marks an interim top at the same level as October. With three or four levels of support, oil looks to retrace a little.
In order:
- $47.50 - The centre of long term support/resistance.
- $45.00 - 50 DMA
- $43.00 - most recent swing low
- $40.80 - 200 DMA (which is upsloping now!)
Lastly on the oil chart above, I have drawn an uptrend line no-where-near the price. But this line would be a potential level for a channel and includes the potential of the price bouncing off the 200 DMA. We can see the MACD broke the uptrend here, so a pullback down to the zero line would all be part of a normal correction.
Natural Gas ($NATGAS) has soared this week. The chart broke out above some major resistance at the 200 DMA last week and this week it continued to accelerate. The weekly RSI had its best reading in 2 years this week. As the MACD enters positive territory above zero, the chart looks fine. Overhead targets of resistance are at $3.00 and $3.75.
I rolled through some of the Bullish ETF's and identified a few more reasons why investors may wish to be "commodity-aware" at this point. Currently, it is the best performing sector this year!
If you would like these blog articles to appear in your inbox once or twice a week, click the Yes button below. For Commodity centric investors the moves have been dramatic. You can also follow me on Twitter @Schnellinvestor.
Recently, I did an important webinar that discusses the Auto Sector. I have embedded it below. In my review of the macro market environment, the auto sector may start to pick up but the webinar tells that story.
"The Canadian Technician LIVE!" with Greg Schnell - 2016-06-07 17:00 from StockCharts.com on Vimeo.
There are some interesting setups and cross currents this week. Japan weakening, the news chatter about Brexit, and both China and India starting to perform. I would encourage you to roll through the webinars. I am pretty sure there are unique perspectives there that you might not have seen.
Good trading,
Greg Schnell, CMT, MFTA.
