Originally published by AxiTrader
WTI managed to bounce after support at $42 held - but how far can the rally go? The downtrend remains clearly intact, and WTI faces strong resistance at the former support area between $44.20 and $44.30. Even if it clears that obstacle, solid resistance can again be expected at $45.20. Selling rallies remains the preferred strategy. Should price break below $42, momentum is likely to accelerate significantly and the commodity would move quickly towards $40.
Another commodity to keep an eye on is NATURAL GAS. It reversed after $2.85 support held, and is moving towards the former key support area between $3.09 and $3.12. It has not been retested properly since the breakout in early June. Traders should therefore expect heavy resistance in that area. A clear rejection off that level would signal that the downtrend is intact, and that another test of $2.85 is likely in the near-term.
COFFEE briefly broke above $125 resistance, but is struggling to sustain momentum. Further, the 21 DMA has capped the topside for today. A look at the daily charts shows that coffee is still in a strong downtrend. It would take a clear break above $135 to change that, and that is unlikely to happen soon. Expect decent resistance at the 55 DMA around $131.50.
COCOA found some support at the trendline connecting the April low with the June 22 low. However, the commodity still looks weak. In the past few months, any larger rally has attracted strong selling interest, and the downtrend eventually resumed. It is difficult to see cocoa recovering in the near-term. Another test of $1750 seems likely. A clear break below that level would then pave the way for a move towards $1500.
Traders looking for volatility, shouldn't put too much hope into COPPER. Price has been consolidating for a while now, and it is unlikely that any trend will develop soon. The topside was once again capped at 2.65. However, copper managed to catch a bid ahead of the 200 DMA. Eventually, it will break out of its range. For now, consolidation seems the more likely scenario and traders should trade it accordingly.
SOYBEAN is looking increasingly bearish. Rallies are weak, and it continues to post fresh lows. Following the break below $930 support, the next notable support level lies at $843 (2015 low). Soybean should reach that level soon. To the topside, expect strong resistance ahead of $950.