Commodity Technical Analysis By Adam Smith Associates
Silver
Silver took support
on the averages [19.71] and may have started wave III of 3 up. The fractal
points to 19.54$ for this move. Support is also at halfway of yesterdays large
trading day near 18$.
Gold Running Flat Consolidation Done
Gold - was in a
corrective consolidation pattern that made higher bottoms for the last several
days. This kind of correction is rare and because it occurs within a rising
trend is called a running flat. In this case it fits a rising channel as shown
on the chart. It is also a sign of strength in the underlying trend. Staying
above the upper end of the channel at 1272 we are in wave iii of 3 that points
to 1327 in the coming days
Zinc MCX
I have to come to
their conclusion that wave 5 ended for many base metals because we are getting
deeper retracements. I have already published lower levels for copper and
Nickel recently. Zinc I believed that wave 5 made a lower top [called
truncated], so it would be wave 1 of 5 and may extend but that was not the
case. I have to accept bad judgement. Wave 5 ended truncated and we are now
correcting a 1 year advance in price. Drawing a falling channel we get to 160,
and wave 4 of the next lower degree is at 150. Both are levels that can be
achieved as long as the trend is down. There maybe bounces along the way that
would improve the risk reward for trades. But we are no correcting a larger trend.
Aluminium MCX
Aluminium Prices started correcting. In my last post I imagined a triangle
that can mean wave e down to 121 before another rally. However stepping back if
I mark the bottom for the commodity in March 2016 we may have completed 5 waves
up. So a break of 121 can also mean a dip to weekly support levels of 118 and
115, and the wave 4 low is at 114.60. So these levels are open as weekly
momentum indicators are in sell mode.
BSE Metals Index
The Metals index fell
far enough to say that we have completed a 5 wave advance and wave 5 is not
extending. Now it is time for a deeper correction before the larger trend up
can resume. A dip back to wave 4 of the rise is normal and that is at 9500 for the
index from 11366, the close today. So that is a close to 20% decline from here
still on the cards before we look for a bottom. The near term chart shows a
potential head and shoulders top pattern whose neckline broke today
Sugar Prices
Global Sugar prices achieved the downside target near the lower end of the
channel where C=A. The fall in wave C may also be 5 waves and done. So we
should now start anticipating higher sugar prices in a new wave up. Mostly a
larger degree 3rd. The Caveat is that Agro prices can and have been
treacherous and so you should wait to see that wave C does not extend lower.
Look for a confirmation like a move above the averages a trendline and momentum
indicators.
Sugar NCDEX
In the morning I reported
that global sugar prices maybe ending wave C down as traded on the CSCE.
However on the NCDEX, the chart below shows that wave B may be just complete
and wave C down to 3400 or lower is still pending. I discussed this target last
month as well. Domestic prices have been lagging behind the global prices and
have a lot of catching up to do downwards. So it maybe early to call a bottom
in sugar from a domestic stand point.
Guar Gum
Guar Gum gets commodities traders interested because of its Volatility and
low floating stock that is often accused of manipulation. So Guar Gum after its
massive 2010-2012 bull run was in a bear market till last year. Mostly that is
over. The next move up may have started. New highs or not we are in an uptrend.
Wave 2 or B retraced 61.8% in early 2017 and the next move higher started. A
breakout above 8770 can trigger a move to the next swing near 13000.
Adam Smith Associates offers trade & commodity finance related services & solutions to its domestic & international clients. Views expressed in this article are purely of the author - Mr Rohit Srivastava - a leading technical analyst. Visit www.adamsmith.tv for services offered by Adam Smith Associates Pvt Ltd
