25-05-2018

Dry Bulk FFA: Panamax Index Bearish

Highlights:
The Panamax index is now below Fibonacci support and testing the USD 9,856 level. Technically bearish below USD 10,006.

The June futures remain technically bearish and continues to make fresh marker lows. The most recent pullback was less aggressive indicating that price action is pointing to an increase in downside momentum even though the stochastics remain oversold. Technical support is at USD 10,460 and USD 10,326.

Price action remains bullish in the Q3 futures, but the MA’s remains flat suggesting we are currently seeing a bullish move in a non-trending environment

The Moving averages on the Cal 19 futures would suggest the technical picture is increasing in strength. A small 5 wave pattern would suggest we could soon enter a corrective phase, this is part of a 7-wave structure that has formed since the 4th of April and from an Elliot wave perspective would suggest there are still 2 more waves in this sequence.

Panamax Index Daily

Source: Bloomberg

Resistance – 10,006, 10,261, 10,914
Support – 9,856, 9,590, 8,721

The little movement we have seen in the Panamax index in the last week has been to the downside. The index is now below its Fibonacci support and testing the USD 9,856 support.

The technical continues to remain in bearish territory below all key moving averages. Both the RSI and the stochastic are oversold, this is not a buy signal and often represents a trending environment.

Upside moves that close above the USD 10,006 resistance would create a fresh high. Technically this would still be below the averages so not a buy signal, it would however suggest that the technical picture is firming and could be the first early signal that the market has based.

Upside moves that fail to close above the USD 10,006 resistance would keep the technical in bearish territory targeting the near-term support at USD 9,590 and potentially lower.

Panamax June 18 daily

Source: Bloomberg

Resistance – 11,560, 11,720, 11,947
Support – 10,460, 10,326, 9,824

The June futures have now broken technical support at USD 11,440 taking the technical from neutral/bearish to bearish. The divergence last week resulted in nothing more than a shortterm pullback before again trading lower.

Lower highs and lower lows support the bearish technical along with price action remaining below the 8 and 21 period EMA’s. Upside moves that close above USD 11,560 would create a fresh market high and suggest the technical picture is firming. However, the 8 and 21 period EMA’s have acted as a strong area of technical resistance suggesting market buyers may want to see price action break the averages before looking for long entries.

Technical support is at USD 10,460 as this is the 100% Fibonacci target based off the March sell off, projected from the high on the 10th April 18. Further support can be found at USD 10,326 and USD 9,824.

Panamax Q3 18 Daily

Source: Bloomberg

Resistance –12,735, 12,890, 13,105
Support –12,263, 12,133, 11,950

A small pullback from the 55 period MA last week resulted in the Q3 finding support on the 8
and 21 period EMA’s.

The technical is making higher highs and higher lows and should be considered bullish in terms of price action. The EMA’s remain below the 55 period MA, so bullish price action is not supported by the averages at this point. Note the averages are also pretty plat signaling a lack of trend.

Downside moves that find support on the 8 – 21 period moving averages (USD 12,328) would have bullish implications for the technical. A close below USD 12,263 would create a fresh market low and indicated the technical picture is weakening.

The stochastic at 85 is now diverging with price. Not a sell signal it does warn that upside momentum could be weakening.

Technically bullish price action but in a non-trending environment

Panamax Cal 19 Daily

Source: Bloomberg

Resistance –12,235, 12,415, 12,490
Support – 11,740, 11,450, 11,328

No pullback in price last week, just sideways action followed by another upward move.

The 8 and 21 period EMA’s are now crossing the 55 period MA indicating the technical picture is firming. However, since the 18 April we can see a small 5 wave pattern which would suggest the Cal 19 futures is possibly readying itself to enter a corrective phase.

The stochastic is now at 95 and diverging with price which would imply that upside momentum is weakening. Downside moves that trade below USD 11,740 would neutralize the current bull move and confirm that the technical has entered a corrective phase.

The 5 wave sequence points to the market looking to correct, however when looking at the technical from the 4th April we can see a 7-wave sequence. This would suggest that the 5- wave sequence is likely to be part of a larger cycle (I.E wave 3) and from an Elliot wave perspective likely to produce 2 more waves. 1 corrective and one bullish, if this is the case the next move down should be corrective and not bearish.

Source: FIS

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