Commodity Futures Market Analysis – January 28th, 2019

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S&P 500 Index Futures (ES)

The S&P 500 E-Mini futures market last week was mostly neutral as a sharp move above the 2600 level was met with a retracement, which was then followed by yet another mini rally towards the end of the week leaving the market hungry for one-sided momentum.

The lack of continued bullish activity from the week prior to last one was already on the cards though, given how the market’s rapid move past the 2600 level left the need for pullback to the level, while potential resistance from the prior period of consolidation above the 2600 level posed more obstacles for bulls last week.

We did, however, notice the market retesting the support and resistance zone just above the 2600 level last week (see chart above) and finding decent support at the level confirmed by the sharp rally on Friday before the market close.

While we acknowledge the existence of the prior consolidation phase that may potentially cause more resistance for buyers, we find the market still boasting off strong bullish influence and so remain optimistic about potentially higher price levels this week.

Light Crude Oil Futures (CL)

The market for crude oil seemed to solidify the move back above the $50 major psychological support and resistance level some more last week as sellers failed to gain any kind of control of the market.

Notably though, while sellers were far from impressive in the market the prior week, we also did not see any strong bullish activity either. This indecision we believe could be an early warning of yet another retest of the $50 level if buyers do not dominate the early part of this week’s trading activity.

As it is, we observe that current price levels still reflect a minor retracement into a very strong and persistent longer term downtrend and so cannot discount the market’s potential to possibly resume the longer term downtrend at some point.

Gold Futures (GC)

The market for Gold displayed interesting price action last week. What initially appeared to be a rebound off the critical $1.13 level was actually overturned by buyers into what is shaping up to be a true bullish breakout past the resistance level.

We did have rather a flat trading activity for the market for the bulk of last week, but we are impressed to see the efforts from the buyers going into the end of the week with a strong close just above the $1.13 level.

This strong close above the $1.13 level means a lot to us because it precedes a weak period for the sellers who failed to create a sharp rebound off the $1.13 level. We suspect the strong bullish momentum here could well push the market up and away past the $1.13 level if this bullish momentum sustains itself going into the first part of the current week.

Euro Currency Futures (6E)

The Euro Futures continued to struggle towards building momentum as a sharp rejection of the $1.14 level towards the latter half of last week re-installed the tight consolidation phase that this market appears to have been strangled in for quite some time now.

We continue to see this market’s activity tamed within the all-important $1.15 resistance level and the support coming in at $1.14-$1.135 levels (see chart above). Unless we see the market making a move past either of these two levels, we suspect this sideways trading activity to linger on.

10 Year US Treasury Futures (TY)

The market for 10 year US treasury futures appeared to trade around critical price levels last week which may partially explain why the market failed to register a strong move last week.

We noticed a slight edge for the sellers last week though as the market did technically close lower than it opened allowing for it to inch ever close to the $121 major support and resistance level. We have already seen a minor bounce off this level not too long ago, and so it should be interesting to see if the market may be gearing up to resume the longer term downtrend, especially after the sharp reversal off the 122 level a couple of weeks ago.

We will be watching for signs of strong selling early this week as a potential early indicator of the market wanting to trade yet again at discounted price levels under the 121 support and resistance level.

There is a substantial risk of loss in futures trading. Past performance is not indicative of future results.

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