Commodities Monthly (May ’16)

The rally from the USD26.05 low of February continues to extend, with Crude Oil futures now pressuring the USD46.40, (23.6%) retracement of the 2013-2016 fall. Overstretched weekly readings suggest risk of a minor pullback, but congestion around USD40.00 should underpin any tests as studies continue to strengthen and investors maintain a buy-into-weakness strategy.

An unexpected break, however, would turn investors cautious, and open up risk of a deeper reaction towards the USD35.24 low of April.

In the coming months, focus should remain on higher levels, as the dominant rally gains traction, with the USD48.60, (61.8%) retracement of the 2015-2016 fall to attract. A break will open up the psychological barrier at USD50.00 and the USD50.92 high of October 2015.

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