Dry Bulk FFA: Supramax In Correction Mode

The index remains in a corrective phase but remains technically bullish on its moving averages. Upside moves from here would keep the bullish high low sequence intact. However, a close below USD 10,671 would create a lower high and lower low sequence on the Daily chart and be considered indicate downside continuation.

The May futures remains corrective but is finding support at the 61.8% Fibonacci retracement level.

Technically we need to see this making new highs above USD 11,790. However, a close above USD 11,905 is preferable. Fresh lows are technically bearish but have the potential to produce a bull divergence.

The Q3 technical remains in a corrective phase and continues to conflict. 38.2% often signals a wave 4 termination, and 61.8% often signals a leg B termination. Ultimately price action is the lead indictor and needs to produce a higher high to signal the corrective phase is over.

Like the Q3 the Cal 19 technical is conflicting and remains in bearish territory having produced a neutral close yesterday. A ne high is needed to signal the corrective phase is over.

Supramax Index Weekly

Source: Bloomberg

Resistance – 11,314, 11,513, 11,712
Support – 10,671, 10,498, 10,059

The Supramax index remains in a corrective phase having retraced nearly USD 2,000 from its recent high and has now started to find support between the 8 and 21 periods weekly EMA’s.

Technically the Exponential averages remain in bullish territory with the 8 periods above the 21 periods. However, the averages have now started to flatten out which would indicate that the technical is no longer in a trending environment.

Technical support is at USD 10,671 (recent weekly low), with Fibonacci support at USD 10,498 and USD 10,059. Downside moves that close below the 61.8% retracement support (USD 10,498) would indicate that the longer term technical is weakening as the market retracement would be considered as being to deep. Likewise, upside moves that fail to trade above the 61.8% retracement would suggest further downside within the current corrective phase.

The weekly technical is starting to show signs basing as we approach market support.

However, upside momentum remains weak and higher prices are needed to attract buyers into the market.

Supramax May 18 (Rolling Front Month)

Source: Bloomberg

Resistance – 11,790, 11,905, 12,130
Support – 11,273, 10,843, 10,510

The 8 and 21 period EMA’s remain technically bearish and the 21 period EMA has now crossed the 55 period MA.

Technically bearish there are some warning signs that the market could find support at these levels. The stochastic has the potential to produce a bullish divergence if a fresh market low is made. Not a buy signal it does indicate a slowing of downside moment and will need some form of technical confirmation. We are also seeing technical support at the USD 11,236 Fibonacci support.

Fibonacci resistance is between USD 11,905 and USD 12,354. However, we have a lower high at USD 11,790, a close above this level would indicate bullish momentum is growing, and a close above the USD 11,905 level would be regarded as technical confirmation that we are in some form of bullish wave.

Downside moves that create a new low would indicate downside continuation, targeting USD 10,843 and potentially USD 10,510.

Supramax Q3 18 Daily

Source: Bloomberg

Resistance – 11,811, 12,090, 12,270
Support – 11,417, 11,204, 10,860

The converging averages would indicate that the Q3 contract is no longer in trend. The lower market low would indicate that the phase is currently corrective.

The Q3 futures found support at the 38.2% Fibonacci retracement level and this is often an area of termination for a leg 4 corrective phase. However, it failed at the 61.8% retracement which is usually associated with a leg B (bull wave in a corrective phase) and this gives a conflicting technical picture.

The stochastic is making higher highs whilst price action is not, and this is often a bearish technical signal which supports the leg 4 corrective argument.

Price action is the lead indicator, a close above the recent high of USD 11,811 would create a higher market high and have bullish implications going forward. Below this level until a higher high is produced the technical should be regarded as corrective.

Technically we remain in a leg 4 corrective phase. Above USD 11,811 would suggest we have entered into leg a 5-bull wave.

Supramax Cal 19 Daily

Source: Bloomberg

Resistance – 11,394, 11,740, 11,870
Support – 11,025, 10,764, 10,503

The Cal 198 technical is very similar to the Q3 18 futures. The pullback is deeper but the retirement to the 61.8% Fibonacci level would indicate a leg B (bull wave in corrective phase) and this is supported by a bearish hidden divergence.

Flat and converged moving averages signal the lack of a trend at this point. Near term the technical should be considered as bearish until it makes a higher market high. Resistance is at USD 11,394, a close above this level would be considered as technically bullish.

Both the Q3 and the Cal 19 showed similar unchanged close yesterday and this suggests price action itself is neutral. A close above USD 11,298 would signal a strengthening technical whilst a close below USD 10,984 would be considered as technically weak.

Source: Freight Investor Services

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