07-03-2017

Dry Bulk: Capesize Market On Bullish Mode according to Futures Activity

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The weekly Capesize index remains in bullish territory whilst the daily territory chart is testing the resistance level at US$ 9,468 which was the market low on the 11-1-16. Mixed signals from the capesize index this week as the daily chart is showing a bearish divergence whilst showing a classic J hook buy pattern. We may falter here in the short term, however it is worth noting that the weekly momentum is moving into buy territory.

A close below US$ 7,893 will put us into a corrective phase and market longs should exercise caution below this level.

As expected the Cal 18 futures pulled back creating buy opportunities in the market, with support levels not being breached (or tested), resulting in further market highs up to US$ 13,470. With the trend being bullish we remain with this technical view, however we should highlight that the daily chart is once again showing a bearish divergence, this would suggest another corrective move is due.

Caution on a close below US$ 12,560 as this will be the first fresh low since December. A further close below the trend support at US$ 12,497 (todays support, but remember it is a rising support line) should have market longs preparing for a more substantial corrective phase.

Technical resistance can be found at US$ 13,850 and US$ 14,335.
Point of note, iron ore weekly futures charts are showing bearish divergence, with the index approaching a 7 year monthly trend resistance on the index just above US$ 98.50.

Like the Cal 18 futures, the Q2 futures remain in bull trend, and a market pullback has held. Again, like the Cal 18 we are seeing a bearish divergence suggesting we are starting to over extend in the short term.

At this point any market pull back that holds above US$ 9,850 remains in bullish territory, especially if momentum is oversold. However any upward thrust that fails to break the current high (on the chart) at US$ 12,543 should have longs preparing for a corrective phase within the bull trend. A lower high followed by a lower low would confirm this.

We noted last week that the Panamax index remained in bullish territory, and that we would like to see close above the US$ 7,728 for this to gain bullish momentum. This has been the case and we are now seeing higher pricing with the index now at US$ 8,982.
Technical resistance on the daily chart can be found at US$ 9,464, 10,173 and US$ 12,470. A close below US$ 7,279 is needed for the daily index to look technically bearish at this point, with further support at US$ 6,445 and US$ 6,139.

The Cal 18 futures remain bullish, however we are seeing lower momentum on the daily chart suggesting a market pullback into some form of corrective phase could be happening soon. Pullbacks in bullish trends create opportunities to enter fresh longs, especially on an index that is seeing a bullish momentum push.

A close on the Cal 18 below US$ 9,325 could push the market down to US$ 8,860, below this level market longs should exercise caution as this would suggest a potential longer term corrective phase. A close above the US$ 9,480 would suggest upside continuation with further resistance at US$ 9,870.

March futures held last week, broke resistance signalling market continuation and continued to push. We are now going to move onto the April futures, which like the March broke technical resistance levels last week after a very small pullback. Technically bullish above US$ 9,740, any market pullback that holds above this level has bullish implications going forward, especially on oversold momentum. A close below the level should have longs tightening risk as the last time we broke a previous low was on the 14-12-16. Resistance can be found at US$ 11,287 and US$ 11,715.

Another positive performance on the Supramax Index has put the daily chart back in line with the weekly chart, in bullish territory. Weekly momentum has now crossed the 50 line confirming buy entries on the index.
Technical support on the weekly chart can be found at US$ 8,189, as this is the 200 weekly Moving average. However a close below US$ 6,934 is needed on the daily chart to activate sell signals at this point. Resistance on the daily chart can be found at US$ 9,090 and US$ 10,198.

Technically in bullish territory as above key averages on the weekly, it did make a lower low on the 10-2-17. This means that we need to see a higher low high combo for the index to gain more solid momentum.

The daily Cal 18 futures are currently in a corrective phase (all be it sideways), with daily momentum now oversold. However the weekly momentum is now overbought, but above 80 so maintaining a bullish bias.
A close below US$ 9,190 would suggest a market pullback should happen, however the bullish trend would suggest that this should be into support. As long as we hold above US$ 8,595 we should get another thrust. The lower the pullback, the less likely this will be into new highs.

The fact we are technically bullish and the momentum is oversold, any close above US$ 9,295 would signal technical continuation in the market. This is where it gets tricky as an upside breakout would immediately create a bearish divergence, suggesting upside movement could be limited. Technical resistance can be found at US$ 9,280, US$ 9,340 and US$ 9,445.

Interestingly, the more bullish play is actually a market pullback, providing it is not to close to the US$ 9,295 level. Somewhere above US$ 8,869 should be sufficient enough.

Source: FIS

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