Originally published at: https://optimusfutures.com/tradeblog/archives/commodity-futures-market-analysis-february-11th-2019/
S&P 500 Index Futures (ES)
The S&P 500 Emini futures market last week closed on a neutral note as sharp periods of buying activity in the weeks prior lead to the market possibly taking a breather past the all-important 2700 round number.
We acknowledge the strong evidence of support and resistance at and around the 2700 level and the push past this level from the buyers last week as a considerable achievement. The latter half of the week, however, belonged to sellers who bid price lower, allowing the market to retest the 2700 level for support.
Notably, the bearish close on Friday may still warrant more bullish activity going into this week, especially if the 2700 level continues to provide solid support as in the past. We suspect a continuation of the current bullish momentum this week could potentially cause the market to inch closer towards the 2800 and the 2900 levels that may create an obstacle for buyers, given their potential to serve as support and resistance levels in the market.
Light Crude Oil Futures (CL)
The market for crude oil which has shown a surprising level of correlation with the S&P 500 market over the past several weeks, which was also rather sluggish last week as buyers appeared largely absent from the scene reminiscent of a sharp pullback in the market.
We noted strong resistance come into the market just above the $55 long term support and resistance level deeming the push past the level earlier on as a fake breakout and a trap for the bulls. The market hurried back down last week and the strong close below the $55 level may potentially point to some more bearish activity in the market this week.
If we do see more selling, we may well be in line for another retest of the critical psychological $50 round number which may be tested for its support potential for a market that largely appears to be bullish for the time being.
We see this market constrained between the $55 and the $50 price levels – both significant for the market. This also makes for an interesting week as we await retests of either of these two levels to see which ones gives way first. That break alone might potentially provide a fresh directional bias for the market.
Gold Futures (GC)
The market for Gold was understandably sluggish last week as it treads into critical trading zones marked by longtime highs and lows, consolidation phases and long term support and resistance levels.
While the market’s strong push past the $1300 major support and resistance level was a strong statement from the bulls in the week prior to last one, we feel the pullback and retest of the level that we witnessed this past week comes as less of a surprise, given how important the $1300 level is.
Interestingly, on Friday we already saw a small rejection off the $1300 level proving its worth as a formidable level of support for the buyers in the market. We remain biased towards the buyers for this market looking at the overall strength of the uptrend but our confidence stems majorly out of the $1300 level continuing to provide the needed support. We will remain cautionary for any hints of the market potentially dropping under the $1300 level.
Euro Currency Futures (6E)
Futures market for Euro showed a refreshing burst of momentum last week as the market appears to display more signs of finally breaking past the notorious consolidation phase.
We witnessed a sharp rejection last week of the $1.155 support and resistance level which we identified as being in line with the descending resistance trend line as well. The combination of the technical factors may have been a major factor propelling the sell side momentum last week, allowing for the market to retest $1.135 level once again ( see chart above). We also noticed the sharp close at the level which suggests the level may potentially be weakening up as a source of support.
Interestingly, we see that the $1.135 level also falls in confluence with the rising support trend line that completes the wedge pattern formation. Looking at the sudden surge in momentum we think the market may potentially be gearing up for a much anticipated breakout past the wedge pattern formation and close by support and resistance levels.
10 Year US Treasury Futures (TY)
The market for 10-year US Treasury Futures closed higher than the open last week and was majorly bullish through the week, although the effort from the bulls left much more to be expected.
Part of the reason for the sluggish trading activity in the market had to do with the market showing signs of being bogged down between two major long term support and resistance levels: The $123 price level and the $121 price level – a theme that has now dominated the market for several weeks in a row.
We remain on the sidelines for this market until we see clear signs of the market either pushing past the $123 level or under the $121 level to create an environment for a more reasonable mid to long term directional bias.
There is a substantial risk of loss in futures trading. Past performance is not indicative of future results.