18-04-2018

Dry Bulk FFA: Panamax In Bearish Territory

Price action in the Panamax index has now entered bearish territory on the daily chart. However, the longer-term picture would suggest we have been in a technical range for the last 7 months with range support at USD 9,856.

The May futures remain neutral to bearish below the USD 12,755. Upside moves that close above this level would have short term bullish implications.

However, the EMA’s would remain in bearish territory.

The Q3 futures look overbought from a technical perspective. The big question are we still on leg 4, or have we already started leg 5. Pullbacks that hold above USD 11,894 would suggest leg 5 (though ultimately a higher low would have bullish implications) upside moves that close above USD 12,735 would suggest leg 5 as this would be a fresh market high.

The Cal 19 futures remain below key moving averages. If we have entered leg 5 the technical continues to remain in bear territory and a higher high and higher low are needed. Market pullbacks that hold above USD 12,211 strengthen the bull argument.

Panamax Index Daily

Source: Bloomberg

Resistance – 11,504, 11,796, 12,088
Support – 10,513, 10,223, 9,856
On the daily chart the Panamax technical has now entered bearish territory with price action below all its key moving averages. The weekly technical has found support on the 55 period MA with the short period RSI in oversold territory, and this has resulted in a temporary respite and a small pull back.

Fibonacci resistance is between USD 11,504 – USD 12,088, upside moves fail in the resistance zone would support a weakening technical and suggest lower pricing.

Downside moves that hold above the recent low at USD 10,559 would imply that the technical is basing, however a higher high would be needed for confirmation of this.

The near term technical is looking weaker now on the Panamax index. However, the longer term technical picture is neutral, as the index has been in a sideways range since October 2017.

For pattern enthusiasts there is a potential megaphone top (Highlighted). However, this is one of the least reliable patterns and not one we feel should be watched closely.

Panamax May 18 daily

Source: Bloomberg

Resistance – 12,715,12,755, 12,872
Support – 12,400, 12,248, 12,092

Price action in the May futures is currently between the 8 and 21 period EMA’S which have started to flatten out. However, we remain below the 21 period EMA and 55 period MA which keeps the technical in bearish territory.

We can also see a resistance area is forming between USD 12,715 and USD 12,755 which would suggest upside price momentum is starting to fade.

The market has now produced a lower high in bearish territory, a close below USD 12,400 would produce a lower low and indicate a further weakening of pricing from a technical perspective.

Upside moves that close above USD 12,755 would be above the resistance zone and have near term bullish implications for the April futures. However, the 8 period EMA would still be below the 21 period EMA and keeping the market in bearish territory.

Panamax Q3 18 Daily

Source: Bloomberg

Resistance – 12,720, 12,735, 12,890
Support –12,210, 12,052, 11,894

The strong bounce on the intraday off the 38.2% USD 11,124 support level has potential bullish implications for the Q3 technical and has resulted in price action trading above key moving averages.

The strong bounce has pushed the stochastic up to 91 and into overbought territory. This isn’t a sell signal, but it does warn that momentum has the potential to slow down at these levels and a corrective phase could be upon us soon.

Technically the Q3 futures have produced a new high close (by USD 15) and this has put the technical into bullish territory. However, the new high close was marginal and should be treated with caution, especially as the moving averages have started to cluster, indicating the market is no longer in trend.

From an Elliot wave perspective, we have entered a wave 4 corrective phase, the big question is, do we remain on leg B, or have we seen wave completion and entered leg 5?

A close below USD 12,570 would put the Q3 18 futures into a corrective phase, and price action below USD 11,894 would suggest that we are on leg C of leg 4. Ultimately, downside moves that hold above 11,385 would indicate we have entered leg 5. However, price action that holds above USD 11,894 would give more certainty that we are already in leg 5.

Downside moves that close below USD 11,385 would indicate that the technical remains corrective.

Panamax Cal 19 Daily

Source: Bloomberg

Resistance – 11,911, 12,235, 12,415
Support – 11,022, 10,863, 10,676

The big question for the Cal 19 futures is the same one as that of the Q3. Leg B of wave 4, or have we entered leg 1?

Technically price action is slowing and the stochastic is in overbought territory suggesting some form of corrective wave is due. The technical is conflicting, the pullback bounced of the 50% Fibonacci retracement which would suggest a leg 4 completion, but is stalling at the 61.8% retracement which indicates a leg B.

Ultimately the market needs to produce a higher high and higher low to be regarded as bullish and this will signal the end of the corrective phase.

The moving averages have now flattened out with the 8 period EMA still below the 21 periods.

This would suggest that even if wee have entered leg 5 the technical itself remains in bear territory. Downside moves that hold above USD 11,211 would strengthen the bull argument.

Source: FIS

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