Sunday, December 27, 2015

CRB Commodities Index Weekly Chart Oversold Falling Wedge Positive Divergence

Commodities have been crushed over the last couple weeks. Iron ore, coal, nickel, PM's, there is nothing spared. The worst appears over in the weekly time frame, however, as shown by the falling wedge pattern (bullish), positive divergence (green lines) and oversold conditions. Thus, price should bounce and already started a +2.3% move higher last week. The purple dots show the mean reversions that occurred and is likely now due to price far below the moving averages.

The pink box shows the ADX losing its strong trend pattern. The move down in CRB is very strong through the entire year--until now. If ADX falls anymore the strong downtrend is over. The expectation is for the CRB to move higher and move sideways to sideways higher for the weeks and few months ahead. If this plays out as the above technical's dictate, that means the US dollar index will likely not rise further as the consensus of market pundits proclaim. If the CRB recovers now, the USD will instead move sideways to sideways lower.

You can poke around in the commodities and pick a couple long plays if the charts mimic the CRB above. The general expectation is for commodities across the board to recover so the dollar index would move sideways with a downward bias opposite of what the consensus expects. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

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