This is not a sell signal, but it does suggest that that there is a weakening in momentum, and the probability of a market correction is increasing. Price action remains the key indicator and this remains bullish, the momentum is a warning, not a certainty. The Daily index has now rallied for 10 consecutive periods, and this is often a signal of potential exhaustion.
Note the daily stochastic is now at 97 and looking overextended. Technically we remain in bullish territory above USD 10,045, but overextended. Pullbacks that hold above this level would suggest continued upside pricing, unless a lower high forms.
Supramax Oct 17 Daily
Support – 11,180, 10,550, 9,870 t – 11,180, 10,550, 9,870
Resistance – 11,475, 11,910
The daily stochastic on the October contract is now in overbought territory have been driven by the hidden bullish divergence highlighted a couple of weeks back. The stochastic at 97 is starting to look overbought, with the current price action failing to trade above the recent high of USD 11,910.
Lower pricing from here would suggest the October contract could be entering a corrective zone. A close below the USD 11,180 should have market longs looking to tighten risk, as from a technical perspective it would suggest that the USD 10,550 level or lower could be tested. Ultimately the trend remains neutral, however there are signs this could soon start to weaken.
Supramax Q4 Daily
Support –11,377, 10,592, 9,828
Resistance – 12,177, 12,247, 12,579
The Q4 Supramax is currently testing our third and final resistance level from last week, at USD 12,177. The trend remains bullish, however the trajectory of the trend and the overbought momentum would suggest this is unsustainable. And a corrective wave is due soon. It is worth noting that we are seeing a divergence on the weekly chart with the stochastic, and the short period RSI. This increases the probability of a market pullback in the near future.
The longer term trend remains bullish above USD 10,592, however there is a small support at USD 11,377 which if broken could attract technical sellers to the market. Market pullbacks that hold above USD 11,377 could see upside continuation to the recent market highs. However, although still bullish below this level, the greater the pullback the harder the climb, and the increased potential of a lower high forming.
Supramax Cal 18 Daily
Support – 9,567, 9,203, 8,640
Resistance – 9,550, 9,635
The Cal 18 has defied expectations and managed to make fresh market highs. Technically the trend is once again in bullish territory.
The daily stochastic is now in overbought territory, with the weekly stochastic showing a bearish divergence, as is the short period RSI. Not a sell signal it does suggest that longer term momentum is showing signs of weakening. And there is now an increased probability of another market pullback.
A close below USD 9,567 could attract technical sellers to the market, targeting the USD 9,203 support and potentially lower. Downside moves that hold above the SUD 9,567 support would imply trend continuation looking to make fresh market highs. Market longs should be wary of higher pricing due to the current divergences on the weekly chart.
Source: FIS
