Support – 10,862, 9,468, 6,570
Resistance – 13,772, 15,301, 19,602,
The Capesize index continues to retreat from recent highs and is trading at US$ 11,414. We have now entered into a support zone between US$ 12,345 and US$ 9,468. A 42\% retreat in price would signal a bear market on any media outlet, however no lower highs keep us in a corrective phase, rather than a bearish trending market. The stochastic remains above 50, technically it remains in bullish territory. Volume as always in freight is declining on the downward move, significantly the open interest remains stable suggesting the market at this point is viewing this move as corrective, rather than bearish. Although we have broken the first of our supports, we are in a support zone, the stochastic above 50 and stable open interest would suggest this is a dangerous area to enter fresh market short.
Capesize Q3 17 Daily
Support – 14,385, 13,770, 13,083
Resistance– 15,492, 16,753, 16,600
The Q3 Capesize futures failed to make a fresh market high, and this would suggest we have entered into a corrective phase. US$ 14,385 is going to be a key level going forward. The lower high would suggest that the current support at US$ 14,385 should be broken. However corrective phases within a trend are usually a 3 wave process, labelled as A, B, C. The stochastic at 37 could soon be in oversold territory; technically at this point A should act as a resistance level if support is broken. If we start trading above, and closing above the A level (i.e. more than just a marginal overlap) then technical traders would view this as the end of the corrective phase, and resumption of the bull trend. Failure to close above point A would signal downside continuation
Capesize Cal 18 Daily
Support – 13,919 13,660, 13,459
Resistance – 15,163, 15,307, 16,535
The key to any technical analysis is the price action. Last week we noted the technical set up could be weakening due to the stochastic pullback being greater than the previous pullback, and this remains the case. Price action is the lead indicator on any chart. Last week’s move made a fresh market high, and this keeps the current move in a bull trend, and not a corrective phase. A corrective phase can only be considered once we have failed to make a fresh high, regardless of other indicators. We maintain caution due to the stochastic pullback, but at this point we have to regard the trend as bullish. Technical resistance can now be found at US$ 15,163 as this is the current market high. Failure to breach this level would suggest a corrective move is upon us. However a close above this level implies upside continuation. Caution on a close below the current low at US$ 13,927 as would also signal weakening momentum going forward.
Capesize Q3 v Cal 18 Daily
Support – 377, 238, (-47)
Resistance-1,270, 1,383, 1,637
The Capesize Q3 v Cal 18 spread is approaching support levels, and the stochastic is showing a bullish divergence. The bullish divergence on the support level should have market shorts looking to tighten risk, as there is now an increased probability of the technical support holding. The lower high does indicate a corrective phase, however unlike the Q3 corrective chart, we have now made a lower low than at point A. If support holds at these levels (US$ 377 – US$ 238) and we start trading back above point A (US$ 434) we could see a resumption of the bull trend. Likewise, if support is broken at point A and then acts as a resistance we should see downside continuation.
Source: Freight Investor Services (FIS)
