price action

Precious metals have been strongly demanded during the last few months: gold prices jumped above $1,000, silver and palladium prices reached recently a new 12-month high.

What about platinum? Have a look at the chart: the medium-term bullish trend in place since last November may above soon. A correction is expected.

Indeed, 11 months of up-trend have driven platinum price to a technical resistance that is likely to prevent a further rise. The historical high price (point A on the chart) posted in early March 2008 at $2,308 was followed by several months of correction and consolidation. The real plunge started at mid-July last year. In just 3 months, platinum prices fell from $2,059 to $752 (point B, down 63%).

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If you’re a coffee lover, have you ever thought of trading coffee on the commodities markets to secure a price for delivery? I’m joking of course, but future contracts on coffee are a way to add some diversification in a commodities portfolio. Traded on the NYBOT (New York Board Of Trade), it’s one of the agricultural components of the CRB Index. Its weight is about 5% of the CRB Index.

There is a medium to long-term triangle configuration where the price moves into a trading range that has been narrowing regularly for the last 6 months. This triangle is built on the upside by a descending resistance line that goes through regular lower highs (points A, B, C and D on the chart). On the downside, the triangle is built by an ascending support line that goes through higher lows (points E, F and G).

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One of the main drivers of the S&P/ASX 200’s bullish trend is the Energy sector. This GICS sector (ASX: XEJ) includes explorers, producers, marketers, refiners and transporters of oil, coal, gas and other consumable fuels.

Oppositely to the main stock indices that started rebounding in March this year, the XEJ index hit a low and bounced back several months earlier, in last November (point B on the chart). This low was posted on November 21 at 10,497.9 points in intraday session. Yesterday the XEJ closed at 16,550.10 points after reaching a high of 16,804.20 points.

This means that it has already rebounded by 60% since last November. And it is probably not finished yet.

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This soft commodity has suffered strongly last year when the crisis pulled metals, energy and agricultural prices back to low levels. After a rebound this year, wheat price action has plunged once again. And now it is about to reach a long-term support that is likely to generate another rebound.

Let’s see this in details. First, have a look at the weekly chart. It gives an immediate and clear snapshot of what the price action has been doing for the last few years. You probably remember that the boom of many commodities occurred in the second half of 2006. This is what happened with Wheat, as the price took off from $3.60 per bushel in August 2006 to a historical high price of $13.49 in February 2008, only 18 months later. That was a 274% rise (point D on the chart).

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