10-03-2018

Dry Bulk FFA: Supramax Market Looking Bullish

The close above USD 10,475 has put the index in bullish territory and it will remain so above USD 9,350.

Fibonacci resistance has held in the March futures and we have now made a lower low. price action is corrective but the technical remains bullish at this point.

A lower low on the Q2 futures would suggest that we could be seeing the wave 5 of wave 3 completion. The longer-term trend remains technically bullish with the near term looking corrective.

Cal 19 futures remain bullish but have formed a range between USD 11,700 – USD 11,880. A close above the USD 11,880 would suggest upside continuation. The mean reversion gap that has formed between price and the 50 period MA would suggest the market is overextended. However, this is not a sell signal. A close below USD 11,700 would suggest the Cal 19 futures have entered a corrective phase.

Supramax Index Daily

Source: Bloomberg

Resistance – 11,291, 11,891
Support – 10,475, 9,350, 9,229

The close in the index above the USD 10,475 level signaled the end of the corrective phase as a new high has now been made. Price action is above the 8 and 21 period EMA’s which are now above the 50 period MA, indicating the technical picture is now bullish.

Downside move that hold above USD 9,350 would keep the index in bullish territory and suggesting upside continuation.

Downside moves that trade below the USD 9,350 support neutralize the current bull move and be regarded as technically bearish.

Technical resistance is at USD 11,291 and USD 11,891 with support between USD 10,475 and USD 9,229.

Supramax March 18 Daily

Source: Bloomberg

Resistance – 11,993, 12,910, 13826
Support – 10,510, 10,170, 9,986

The technical resistance at USD 11,993 continues to hold in the March 18 futures. The market has now made a lower low below the USD 11,740 level which would indicate that we have now entered a corrective phase.

The moving averages continue to remain in a bullish environment and at this point would suggest the downward move is corrective in a bull trend, rather than bearish.

Upside moves that close above the USD 12,020 high would put price action back into bullishterritory, with upside resistance between USD 12,910 and USD 13,826. The next technical support level is at USD 10,510.

Although price action is bearish the technical based on the moving averages remain bullish, indicating downside moves could be limited unless the shorter period EMA’s cross the 50 period MA. The stochastic at 84 remains overbought but this is not a sell signal as it also represents a trending environment and has spent a large majority of the last 3 months above this level.

Supramax Q2 18 Daily

Source: Bloomberg

Resistance – 12,854, 13,773, 14,693
Support – 11,367, 11,047, 10,650

The longer-term trend remains bullish but corrective on the Q2 18 Supramax, based on Elliott
wave analysis.

The futures have held at the USD 12,854 61.8% Fibonacci resistance and now made a lower low suggesting that we have entered a corrective wave 4 within a longer-term trend.

Technical support is at USD 11,367 with Fibonacci support at USD 12,130 and USD 11,984.

Upside moves that close above the recent high at USD 12,900 would put the technical back into bullish territory indicating an extended 5th wave.

The 8 period EMA is now starting to converge with the 21 period but remains bullish at this point, the stochastic at 88 is starting to turn down with the weakening futures.

Elliot noted that leg 4 corrections often retraced to the Leg 4 of one lesser degree. If correct this would make the downside target zone between USD 11,688 and USD 11,367.

Supramax Cal 19 Daily

Source: Bloomberg

Resistance – 11,880, 12,252, 12,523
Support – 11,700 10,830, 10,444

Little has changed in the Cal 19 futures in the last week with price action moving sideways around the USD 11,814 Fibonacci resistance. This has resulted in the futures forming a tight range.

Technical support is at USD 11,700 and resistance is at USD 11,880. A close above the USD 11,880 level would be regarded as technically bullish, likewise a close below the USD 11,700 support level would suggest the futures have entered a corrective phase.

The stochastic at 96 is overbought, but again this can represent a trending environment. We also see a mean reversion gap forming between price and the 50 period MA. not a sell signal it is a warning that the market could be over extended.

Source: Freight Investor Services (FIS)

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