CRB Index Technical Analysis Report

CRB Index

The CRB index went past the Sept high due to the recent rally in crude prices. For a while I have maintained that crude will see a dip before a rally. The dip did not last but the new highs are now causing metals to resume the rally. The question on the back of the mind is whether the larger wave C/3 rally has started already?. Crude did not look impulsive in the initial phase of the move up but was making higher tops and bottoms. So that takes me to the CRB index that has a different look. This index has 2 clear 5 wave rallies that I interpreted as a-b-c and was expecting a dip but with the hights taken out the bullish alternate is to consider 1-2-1-2-3 as an alternate which means that there is a lot more steam in the CRB commodity index and thus the whole space. The base metal prices after the recent correction have started giving buy signals again so clearly something else could be at work. The bull run in metals may resume again as prices take off to new territory. Have covered Lead today but will cover the others like Aluminium and Nickel that are showing possible bullish outcomes. Copper is lagging behind as usual along with Zinc. Gold and Silver often work opposite to the base metals but eventually catch up so for now they are still correcting. The daily chart of the CRB index parallel channel now goes to 200 as the next potential target.

Now you should also appreciate the big picture. The CRB index in wave 2 dipped to a 70.7% retracement. If wave 3 has started it should go to the upper end of its channel but may also test the falling trendline from the 2008 high. While most people cannot imagine a bull market in commodities coming back, with the bear market in the dollar this is exactly what you might get. So expect targets on the upside to overshoot in commodities. This will have a direct bearing on commodities prices. I will not be surprised if the falling trendline is eventually surpassed. The reasons are a combination of coming supply tightness and the other purely past monetary actions. Both have been overlooked by the markets due to the crash in prices in the wake of the rising dollar despite years of growth in GDP and expansionary policy. The big turn might have started sooner than most are expecting.

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