Tuesday, June 07, 2016

Commodities: Agriculture (DBA), Gold (GLD), Natural Gas (UNG), and Crude Oil (USO)

Since Yellen's dovish speech several commodities seem to be making interesting moves. Most continue to be within patterns that were identified some time ago, with the exception of Agriculture (DBA), but without a big bullish move some time in the near future this patterns may resolve bearishly.

Agriculture: DBA
DBA looked to be putting in a large bearish ascending wedge but this recently broke up big-time! Similar moves have been noticed in wheat and sugar. This is a very bullish development and DBA looks to be a long-term buy. After this impressive move however some horizontal action is likely before it continues upwards.
Crude Oil: USO
A massive ascending bearish wedge remains the go-to-pattern for Crude Oil. Without a significant move very soon this is going to have to break downwards. Crude is still a strong short/sell, but only if very tight stops are in place in-case it does magically break upwards.
Gold: GLD
Interestingly gold made a jump up and paused exactly where my channel resistance line was drawn. The question now is, how much will it retrace? Only when the issue of interest rates and the U.S. dollar resolved will we get a clearer picture. I would advise remaining on the sidelines for now as some short-term overbought indicators need to be worked off.
Natural Gas: UNG
UNG was stuck for a long time in a very tight horizontal channel until suddenly about three sessions ago it jumped upwards. This is a long-term bullish development and I believe finally we are seeing the beginning of a bottoming pattern with bullish moves upwards.