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Global Commodity Technical Analysis Report

Commodities Prices Rallied Amid OPEC+ Oil Supply Cut, Two Commodities In Lucrative Range – Lead, Sug

Oct 12, 2022

Global Commodity Market Wrap-Up

Last week, commodities prices continued its last week rally after OPEC+ announcement to cut crude oil supply.  Meanwhile, Gold prices continued to trade in a positive direction and settled with a weekly gain of 2.29%, while silver prices settled at a weekly gain of 6.50%. Base metals also trading in a mixed tone last week. Notably, Copper and Zinc prices have witnessed a weekly decline of 2.22% and 0.10%, respectively, while Lead prices settled with a weekly gain of 9.24%.

On the Energy front, Crude Oil prices witnessed good upside rally after the prices broke a falling wedge (bullish pattern) and settled at a weekly gain of 16.54%. However, natural gas prices settled at a weekly loss of 0.27%. Meanwhile, Agricultural commodities prices were also traded in positive territory tracking crude oil prices.

In the current week, commodities prices are showing mixed trend due to rising US dollar index which offset the impact of escalating tension between Russia and Ukraine. The precious metals prices are showing some correction from key resistance levels after recent rally in the prices. Base metals are also witnessing some profit booking from higher levels. On the energy front, Crude Oil is trading in a range with a weak bias, while Natural Gas prices are also showing range bound movement. The agricultural commodities basket is trading in positive momentum in the existing week.

The upcoming macroeconomic events that may impact the market sentiments include an update on US Retail Sales, FOMC Meeting Minutes, Unemployment Insurance Claims, and Natural Gas inventories released weekly.

Having understood the global commodities performance over the past one week, taking cues from major global economic events, and based on technical analysis, noted below are the recommendations with the generic insights, entry price, target prices, and stop-loss for Lead December Futures (LME: CMPBZ22) and Sugar No. 11 March Futures (ICE: SBH3) for the next 1-2 weeks duration:

Lead December Futures (LME: CMPBZ22)

Price Action and Technical Indicator Analysis:

LME Lead December Futures' prices are facing the resistance of a downward sloping trendline on the upside and are trading below the trendline resistance. Moreover, prices are trading below the trend following indicator 50-Period SMA on a weekly chart which may act as resistance levels. The leading indicator RSI (14-period) is moving below the midpoint and showing a reading of ~49.13 levels, which indicates weakness in the prices for the downside momentum.

Now the next crucial support levels appear to be at USD 1880.00 and USD 1800.00, and prices may test these levels in the coming sessions (1-2 weeks). 


 

As per the above-mentioned price action and technical indicators analysis, Lead December Futures (LME: CMPBZ22) is looking technically well-placed for a ‘Sell’ rating. Investment decision should be made depending on an individual’s appetite for upside potential, risks, and any previous holdings. This recommendation is purely based on technical analysis, and fundamental analysis has not been considered in this report. Technical summary of ‘Sell’ recommendation is as follows:

Sugar No. 11 March Futures (ICE: SBH3) 

Price Action and Technical Indicator Analysis:

Sugar No. 11 March Futures' prices recently broke a downward-sloping trendline by an upside and are trading above the breakout level on the daily chart from past three days. The leading indicator RSI (14-period) is moving in a positive zone and showing a reading of ~65.20 levels, which indicates the further possibility of upside momentum. The prices are trading above the 21-period and 50-Period SMA on a daily chart, further supporting the bullish momentum.

Now the next crucial resistance levels appear to be at USC 19.50 and USC 19.67, and prices may test these levels in the coming sessions (1-2 weeks). 

 

As per the above-mentioned price action and technical indicators analysis, Sugar No. 11 March Futures (ICE: SBH3) is looking technically well-placed for a ‘Buy’ rating. Investment decision should be made depending on an individual’s appetite for upside potential, risks, and any previous holdings. This recommendation is purely based on technical analysis, and fundamental analysis has not been considered in this report. Technical summary of ‘Buy’ recommendation is as follows:

Upcoming Major Global Economic Events

Market events occur on a day-to-day basis depending on the frequency of the data and generally include an update on employment, inflation, GDP, WASDE report, consumer sentiments, etc. Noted below are the upcoming week's major global economic events that could impact the commodities prices:

Futures Contract Specifications


Disclaimers 

Related Risks: Based on the technical analysis, the risks are defined as per risk-reward ratio (~0.80:1.00), however, returns are generated within 1-2 weeks’ time frame. This may be looked at by Individuals with sufficient risk appetite looking for returns within short investment duration. Investment recommendations provided in this report are solely based on technical parameters, and fundamental performance of the commodities has not been considered in the decision-making process. Other factors which could impact the commodity prices include market risks, regulatory risks, interest rates risk, currency risks, and social and political instability risks etc.

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: Individuals can consider exiting from the commodity if the Target Price mentioned as per the Technical Analysis has been achieved and subject to the factors discussed above.

Note 3: How to Read the Charts?

The Green colour line reflects the 21-period moving average while the red line indicates the 50- period moving average. SMA helps to identify existing price trend. If the prices are trading above the 21-period and 50-period moving average, then it shows prices are currently trading in a bullish trend.

The Black colour line in the chart’s lower segment reflects the Relative Strength Index (14-Period) which indicates price momentum and signals momentum in trend. A reading of 70 or above suggests overbought status while a reading of 30 or below suggests an oversold status.

The Blue colour bars in the chart’s lower segment show the volume of the commodity. Commodity with high volumes is more liquid compared to the lesser ones. Liquidity in commodity helps in easier and faster execution of the order. 

The Orange colour lines are the trend lines drawn by connecting two or more price points and used for trend identification purposes. The trend line also acts as a line of support and resistance.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock. 

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock. 

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices. 

Risk Reward Ratio: The risk reward ratio is the difference between an entry point to a stop loss and profit level. This report is based on ~80% Stop Loss of the Target 1 from the entry point.

The reference date for all price data, volumes, technical indicators, support, and resistance levels is October 12, 2022 (Chicago, IL, USA 1.57 AM (GMT -5). The reference data in this report has been partly sourced from REFINITIV. 

Note: Trading decisions require a thorough analysis by individuals. Technical reports in general chart out metrics that may be assessed by individuals before any commodity evaluation. The above are illustrative analytical factors used for evaluating the commodity; other parameters can be looked at along with additional risks per se.


Disclaimer-

Kalkine Equities LLC provides general information about companies and their securities. The information contained in the reports, including any recommendations regarding the value of or transactions in any securities, does not take into account any of your investment objectives, financial situation or needs. Kalkine Equities LLC is not registered as an investment adviser in the U.S. with either the federal or state government. Before you make a decision about whether to invest in any securities, you should take into account your own objectives, financial situation and needs and seek independent financial advice. All information in our reports represents our views as at the date of publication and may change without notice.

Kalkine Media LLC, an affiliate of Kalkine Equities LLC, may have received, or be entitled to receive, financial consideration in connection with providing information about certain entity(s) covered on its website.