Latest correction on commodities has been sharp. Except Copper, we have seen sharp pullback on metals, agriculture and energy. Even though corrections have been sharp they are still in the limits of a ”correction” and there hasn’t been any technical damage on the price charts. Energy sector has been the core focus in the past few weeks due to high prices. With the pullback on crude oil we saw GSCI falling back to the major support area at 675 levels.
Volatility was low and with the latest move on the downside we saw the Bollinger band width expanding. As you can see from two different time frames (daily & weekly charts), price continues to remain above the 200 day moving average, above the horizontal support at 675 levels and in the long-term trend channel. RSI continues to hold above 50 levels. Though yesterday’s correction has been sharp, the intermediate/long-term uptrend remains intact.
We will change our bullish view to bearish only if we see a decisive break below the long-term moving average at 665 levels. This type of weakness will also violate the trend channel support and the horizontal support. RSI will confirm the downtrend by breaking below 50 levels. Before we see these technical signals we will continue to expect the resumption of the uptrend and strong commodities.