Actionable Setups In These Commodity Futures

JC Parets
June 15, 2020

A lot of our focus in the Commodity space has been around Gold/Silver and Base Metals, and rightfully so as those have been trending well, but there are now several interesting setups in the Agriculture space.

In this post, we're exploring some emerging opportunities amongst the less widely-followed Commodities.

First, let's take a look at Rapeseed Mustard, which is a great example of how quickly these assets can move once they get going. Not only does this highlight the profit potential, but also the importance of risk management and respecting stops when things head in the wrong direction.

Click on chart to enlarge view. 

We were actually of the view that Rapeseed Mustard was likely to resolve lower so we did not have a trade recommendation open. Instead, it rocketed higher and left us in the dust.

Can't catch them all, but we can use it as information and see that it's another commodity that's resolving higher recently...not lower. As a result, you'll see that most of our new ideas are on the long side and in the early stages of their move...or have yet to confirm.

Here's Crude Palm Oil reconfirming its long-term uptrend following a brief failed breakdown below long-term support/resistance at 620. Also notice how momentum did not get oversold during this correction, reiterating that buyers are still in control longer-term. As long as prices are above 620, any weakness toward that level can be bought with an upside target near 787.

Cotton is an open trade idea of ours and continues to mean revert. As long as prices are above 15,800 then its failed breakdown and bullish momentum divergence remain intact and targets 18,400.

Cardamom's downside momentum has waned significantly as prices approach potential support near 1,540. If prices are above that level, then we'd look for Cardamom to dig in here and resume its longer-term trend to the upside. Our first upside target would be 2,125, but if a reversal does develop at current levels then we think there's potential to see prices back at their all-time highs of 4,250 in the coming quarters.

Jeera's consolidating is getting awfully tight. When volatility compresses this much, the range's resolution is bound to be explosive. Given prices are at long-term support as momentum diverges positively, we're betting that it resolves higher and would be long above 14,200 with an 18,250 target.

With that being said, if it does resolve lower by closing under 13,200 then we would consider getting short with a target down near 11,250. When volatility expands, it doesn't really matter which direction it's in. We just want to be participating in it.

On the short side, we're looking to fade any strength back up towards 1,100 in Mentha Oil. Given this long-term support break, we'd expect the next stop to be nearly 20% lower at 815.

Turmeric has been a tricky one, so we want to be patient and wait for a move below 5,000 to really confirm this support break and signal the start of a move down towards 3,400. It's managed to dig in above 5,300 support once again, so patience here is key if eyeing this on the short side.

As you can see, a lot of these Commodities are at potential inflection points...offering a skewed reward/risk opportunity for those patience enough for the market to confirm which direction they're headed next.

Thanks for reading and please let us know if you have any questions.

Allstarcharts Team

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