Dry Bulk FFA: Capesize Index Still Bearish
The Capesize index remains in range in a bearish to neutral environment, below the shorter period EMA’s. The seasonality chart over the last 3-5 years have been kind to the Cape index in terms of Average returns.
The wave overlap in the March futures brings into question the Elliott count. It looks like a bullish count and the stochastic is oversold.
However, price action need to make new highs above the EMA’s for technical confirmation.
The Q2 futures are currently in a corrective phase. Upside moves that fail to close above the USD 18,037 resistance would suggest we are on a wave B corrective move.
The Cal 19 futures have made a lower low and are now corrective within a bullish trending environment as price action remains above the shorter period EMA’s.
Capesize Index Daily
Resistance – 13,524, 14,065, 14,318
Support – 11,189, 11,087, 6792
Another week of the capsize index sitting within a range. Support and resistance remain largely unchanged except for price action being below the USD 12,262 support.
The range makes this a bearish to neutral market. Bearish as we continue to find resistance below the 8 and 21 period EMA’s, and neutral due to the ranging conditions.
A close outside of the USD 11,189 – USD 14,318 range should signal the next directional move within the trend. The daily stochastic at 7 is not a buy signal, but a warning that momentum could be slowing, and in theory would suggest that a close below the technical support has a probability of failure.
Note: when looking at the 3 and five-year average on a seasonality chart the March futures have risen between 41.60% and 39.66%. Again, not a buy signal it is something to be aware of.
Capesize April 18 Daily
Resistance – 16,898 17,370, 17,842
Support – 15,370, 15,050, 13,750
The April futures failed at the 21 period EMA resistance confirming price action was in bear territory. This has been followed by a lower high and low, indicating the market is corrective.
The stochastic at 4 remains in oversold territory. However, this does not mean the market is a buy and needs technical confirmation alongside it. The April futures need to make a higher market high above USD 17,842 to be confirmed as bullish, unless the market produces a lower high in between.
Upside moves that fail to close above the USD 17,842 resistance would suggest a more complex correction rather than the simple A, B, C 3 wave correction that we are seeing now.
From an Elliott wave perspective, the market is contradicting itself. The count would suggest we are on Wave 4 having seen 5 waves in the wave 3. However, the corrective move is now below the peak of wave 1, which Elliott suggested was something other than an impulse phase and indicate a 3-wave corrective move in a longer-term time zone. Bull moves need higher highs and to be above the EMA’s due to the wave overlap.
Capesize Q2 18 Daily
Resistance – 18,037, 18,958 18,890
Support – 15,440, 14,850, 14,045
The 5th wave completion has resulted in the Q2 capes entering a corrective phase with price action below the 8-21 period EMA’s which are now showing a bearish cross. However, the shorter period EMA’s remain above the 55 period Daily moving average.
The stochastic at 5 is now in oversold territory and showing a bullish hidden divergence. Not a buy signal it does warn that downside momentum could be weakening. Technical resistance is at USD 18,037, a close above this level would suggest the bull argument is strengthening as the market will have created a new high. Failure to close above this level would suggest a more complex and longer-term corrective phase indicating the current 3 wave correction is wave A of A, B, C.
Upside moves that fail to close above the USD 19,030 level would suggest that the Q2 futures remain in a longer-term leg 4 correction relating to the weekly technical.
Capesize Cal 19 Daily
Resistance – 17,816, 19,370, 18,560
Support – 17,830, 16,923, 16,590, 16,350
The Cal 19 futures continue to fail at the 61.85 Fibonacci extension at USD 17,816. Technically the trend remains bullish above the 8 – 21 period EMA’s which are above the 55-period simple MA.
The Cal 19 has made a new low indicating that it is currently in a corrective phase and needs to close above the recent high of USD 17,830 to be regarded as technically bullish. Downside moves that trade below the USD 17,380 support would suggest the technical is weakening and remains corrective within a bullish environment.
Source: Freight Investor Services (FIS)