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Commodities Bull Market - Trading the CRB Index

Commodities / Inflation Jan 12, 2005 - 07:07 PM GMT

By: Nadeem_Walayat

Commodities

The current correction in the CRB index presents an potential opportunity to buy into the Commodities Bull Market, as the CRB comes off new highs of 292, now down to 282.


Trading the CRB Index

So, how far has the Commodities Bull Market got left to run ?

The commodities recently emerged from a 20 year bear market - That's 20 years ! Which on face value suggests that the bull market may also run for some 20 years !

Looking back at previous commodity bull markets during the last century, 1906-1923, 1933-1953, and 1968-1982 - each lasted an average of just over 17 years !, Taking the low as 1998, this suggests that the Commodities bull could run until 2015 !

Okay now back to the CRB Index - and what the chart is suggesting.

1. Support - is clearly at 268, 260 and along the high at 252. Looking at the congestion zone around 270, its highly unlikely that the current correction would breach the 268.

2. MACD - (Bottom indicator) Shows nearby support, again suggesting that the downside is very limited.

3. 40 week Moving Average - Has been good of late at containing market corrections with the CRB trading at it in the recent session, which suggests at most a break of which would carry the CRB towards 270.

4. Uptrend Line - This is the main support line, and is currently at 274, offering strong support.

Stop-Loss - Therefore the downside risk appears to be limited to between 268 and 274.

Target - The Mid channel line (green) taken from the uptrend line projects 12 months forward to 324. Thus it is highly likely that the CRB will trade at 324 or more at some point during the next 12 months, as long as the support at 270 holds. That suggests a risk reward of 42points to 12points or about 3.5 to 1.

Nadeem Walayat

(c) MarketOracle.co.uk 2005

Disclaimer - This Trade Scenerio is provided for general information purposes only and you are reminded to seek independent professional advice before entering into any investments or trading positions.

The Market Oracle is a FREE Financial Markets Forecasting & Analysis online publication. We aim to cut through the noise cluttering traditional sources of market analysis and get to the key points of where the markets are at and where they are expected to move to next ! http://www.marketoracle.co.uk

This article maybe reproduced if reprinted in its entirety with links to http://www.marketoracle.co.uk


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


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