GOLDMAN SACHS COMMODITY INDEX

This week we have seen some major breakouts. I have analyzed most of them in my previous updates. Commodities index had a strong run and broke out of its 6 month-long consolidation range. I have mentioned that this could be an inverted Head & Shoulder continuation pattern. It looks like this pattern is now confirmed after the strong breakout above the neckline at 675 level. Possibility of pullback should not be ruled out! It is very common to see a pullback to the previously broken support/resistance levels after these type of major breakouts. On the weekly chart it is now clear that the long-term uptrend (2009-2012) is intact and price remained above the 200 day moving average and also in the parallel trend channel. If I should give a rough calculation for the inverted H&S price target it would be 765 level. This is also the highest level the index reached in 2011.

I’m also updating the daily chart as well as weekly chart to see the strength of the breakout from the 6 month-long consolidation range. The breakout occurred at a low volatility period and also completed a nice symmetrical triangle at 680 level before continuing higher. Please note that energy sector has been the biggest factor followed by metals strength during this breakout. You can check my previous posts on energy sector strength.

http://techcharts.wordpress.com/2012/02/18/natural-gas-crude-oil-gsci/

http://techcharts.wordpress.com/2012/02/10/light-crude-oil-3/