• Supramax Index- Little has changed on the index, the lower high would suggest a corrective or consolidation phase.
• Q3 – A head and shoulders pattern has now formed. A neckline break that goes onto act as a resistance level is preferable due to the bullish divergence.
• Cal 18 – Technically bearish, caution on a false breakout due to the divergence with the stochastic as it could prove to be a false breakout.
• Q3 v Cal 18 – This chart is not as bearish as we hoped, however a pullback in the spread that coincides with the Q3 neckline acting as a resistance would suggest this spread could come under pressure.
Support – 8,764, 7,717, 7,555
Resistance – 9,794, 10,198, 10,350
Two weeks of sideways action in the Supramax index mean this technical is little changed.
The index has made a lower high and the stochastic remains overbought at 75.
From a technical perspective the weekly chart would suggest that there is more to do within the corrective phase, however the daily stochastic remains in bearish territory (it is often at extremes) suggesting we could have a short term test to the upside.
We maintain our cautious view on any short term buy plays at this point due to a lower market high on the weekly chart. However a higher pivot low would override the momentum indicators, likewise if we close above USD 9,794, market buyers should be looking to enter market longs from the bullish rejection candles.
Support – 8,398, 7,800
Resistance– 9,215, 9,512, 9,920
Resistance levels held last week and we are now back on support levels.
Last week we mentioned that there was a possibility of a head and shoulders pattern forming, and this has been the case. The holding of the resistance level has also created a lower high within the market.
The key to the H&S pattern is the neckline break, as this would signal downside continuation. Preferably a test to see if support has become resistance is the safest outcome before entering a short on this pattern.
A neckline break will result in a bullish divergence, this could become a function of the retest before entering a market short, or just a failure. Due to the divergence it is advisable to wait for confirmation of the neckline acting as resistance.
Support – 8,600, 8,168
Resistance – 8,915, 9,345, 9,610
We failed to break last week’s initial resistance and we are back on recent lows. The lower high would now suggest the Cal 18 trend is now in transition from bullish to bearish.
The stochastic is at 44 meaning any break in support from here would create a bullish divergence. Not a buy signal it does warn of weakening momentum. However this could still be a 3 wave corrective phase suggesting caution on any technical breakout below support. This is also supported by an oversold weekly stochastic highlighting the probability of a potential false breakout.
Market buyers will still need to see a higher lower before entering from the long side.
Technically bearish, momentum would suggest there could be a false breakout here.
Support – (-74), (-210), (-464),
Resistance– 210, 376
The failure to hold above the resistance levels have resulted in a lower high, putting a bearish spin on the Q3 v Cal 18 spread.
Having seen the Q3 head and shoulders and the Cal 18 chart, we were hoping this chart would look more bearish.
However this like its counterparts is showing a bullish divergence within a bearish trend.
Remembering we are looking for the neckline support to act as resistance on the Q3 futures and this will be key to the spread. If this happens it should result in a further lower high for the spread, and result in downside continuation.
Technically the spread is bearish, but it does (and probably should) pull back in the near term after breaking support.Previous Next