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Dry Bulk FFA: Capesize Index Remains on Bearish Territiry

Technically the index remains in bearish territory as it is below its medium term moving average. However, price action itself has now made a new high and this is a bullish signal. Downside moves that hold above the USD 11,189 support would be considered as technically bullish based on the recent market high. Below this support the market would be considered as bearish.

Capesize Index Daily

Source Bloomberg

Resistance – 14,894, 16,039, 17,184
Support – 11,189, 11,087, 6792
The Capesize index has now traded above USD 14,065 and created a new market high, having completed a 5-wave correction, this has bullish implications going forward. The 8 period EMA remains blow the 21 period EMA with price action on the 21-period average. The new high has bullish implication, however price action itself remains in bearish territory. The stochastic is now moving up having produced a bullish divergence on the daily chart. Meanwhile on the weekly chart the stochastic at 7 is looking oversold. Upside moves in the index that produce a higher low would support a bullish technical move. A downside move that trades below USD 11,189 would be considered technically bearish. The technical remain in bearish territory, however it is starting to show bullish signs. The weekly candlestick is showing a bullish engulfing candle which would support a bull argument.

Capesize March 18 Daily

Source Bloomberg

Resistance – 17,045, 17,270,17,494
Support – 16,320, 15,470, 14,480
The recent high in the March futures has put the technical back into bullish territory. The stochastic at 88 is now starting to look overbought with technical resistance between USD 17,045 and USD 17,494. Near term technical support is between USD 16,320 and USD 14,480 with the latter being the most important of these. Downside moves that hold above the USD 14,480 level would create a higher market low. Having already created a fresh market high this would be considered as technically bullish going forward. Longer term upside resistance can be found at USD 19,135. Downside moves that trade below the USD 14,480 support would be considered as technically bearish going forward.

Capesize Q2 18 Daily

Source Bloomberg

Resistance – 18,160, 18,801, 20,880
Support – 16,296, 15,440
The 8 – 21 period EMA’s continue to remain as a key support to the current Q2 18 trend. Last weeks divergence was a warning of potential weakening momentum, but as stated not a sell signal. The divergence has failed as prices continued to rally, however the stochastic is now at 97 and should be considered overbought. Technical resistance is at USD 18,160 and USD 18,801. Technically the trend remains bullish. A close below USD 16,296 would create a lower low and this would imply the current bull move is weakening. Market pullbacks that hold above the USD 16,296 would suggest we could see another move higher. However, this would be a 5-wave bull move, if accompanied by a second bearish divergence the market would be considered as technically weakening, and imply a longer term corrective move could soon be upon us.

Capesize Cal 19

Source Bloomberg

Daily Resistance – 17,125, 17,463, 18,560
Support – 16,350, 15,690, 14,695
The Cal 19 futures remain in bullish territory with the first technical resistance at USD 17,125. The stochastic at 99 would suggest the market although in a trending environment, is now looking over extended. Downside moves that hold above the USD 16,350 support would suggest that we could see another upward move. However, this would complete a 5-minor wave up and suggest we could enter a corrective formation, as this would complete a wave 3 of the current move that started in June 17. Downside moves that trade below the USD 16,350 support would suggest the current technical is weakening due to the market making a fresh market low. Technically this trend is due a correction, however the longer-term analysis remains bullish based on the current Elliott Wave cycle.

Source: Freight Investor Services (FIS)

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