What's up, Commodities?

JC Parets
June 28, 2021

Honestly, very little is currently moving up in commodities. For quite some time now we've been updating our stance on the commodity cycle and what we think of it. But over the past few months, the market has been messy, to say the least. In this kind of a mess, I find myself questioning the move in the base metals and precious metals pretty often. And while we haven't gotten any confirmation on that front, the confusion persists.

So then, what are we talking about here today? Let's take a look inside!

If you've been invested in base or precious metals over the past 5-7 weeks, I feel your pain. There hasn't been much of a trend there except for all those names going sideways. What's important to keep in mind, is that they're still just going sideways.

So if anyone's tracking the levels there, we'd be interested in the metals only if they move past their most recent consolidation. Until then, it's just a roller coaster ride.

But move out of the metals space, and you'll see that there is a good move coming through in some names. Crude oil has been the star of this show so far! And continues to move higher with our next target being $76 and Rs.5600-5650, in both currencies, respectively. Don't go by the math, go by the level.

Joining this party this week are two more names that we'd like to keep an eye on going forward.

First up, we have Cotton, which we've been discussing since its move above the 22,500 level. While our earlier target of 24,200 has been achieved, there has been another development on this chart.

This week, we got a big base breakout in Cotton. This one is massive, close to an eight-year base breakout! And at a time when the rest of the commodities are taking a snooze! What's the season here? Look for pockets of strength. There will always be something that's outperforming the rest.

Circling back to cotton, we have the highest weekly close and a breakout. What that means is that we're closely watching this breakout to see if it sustains. And if it does, then that's great!

We are bullish as long as the price holds above the level of 24,200. In that scenario, the next target to track would be 29,600.

Up next is a commodity that's making waves in the US market as well. Energy waves, to be clear.

Natural Gas is back in action! We've been looking at this chart for some time. But the major hurdle all this while has been the multiple levels of resistance until the point of 250. This week, we got a breakout above the crucial level of 250. It seems like the overhead supply has been absorbed and the price is ready to march ahead!

You will also notice that this is another base breakout. Sure it's not as big as the one we've seen in Cotton, but it's a base breakout nonetheless! This is a common theme that we've been following-- base breakouts. In a market as messy as this one, the ticker symbols with the most conviction would be ones moving past crucial long-term levels. And that's exactly what we're looking for!

So as long as Natural Gas trades above the risk management of 250, we are bullish. The next target to track in that case would be a little over 330.

So this was an update about the pockets of commodities where we're seeing strength. Will these continue to move higher? That's something we'd like to watch over the next few weeks.

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

Allstarcharts Team

Filed Under: