Opportunities in the Commodities Market

Market volatility should be favoured not feared, says City Index Chief Technical Analyst Sandy Jadeja as he explores potential opportunities in the commodities market. 

With global indices receiving a focus in last week’s media, it appears that the declines certainly caught the attention of traders.

Markets dropped to the tune of 8% and had caught some people off guard. But volatility should be favoured rather than feared as this can create potential opportunities.

The moves across indices were not the only arena where traders could have caught some nice moves. Within the commodities sector, we once again saw oil dominating traders’ screens. With Libya as a focus, the price of crude oil jumped up 19% from February 2011 to March 2011. This was followed by a decline of 10% and has now started its move to the upside.

If we see positive momentum continue then it is likely that Nymex crude oil on the May contract could be looking at an attempt to break above the $108 per barrel high. For now the contract needs to clear above $104 and also stay above the $97 support level.

If successful, $111 could become the next price objective.

Gold prices have also risen by 3% after finding support above the $1.379 level. We could be looking at $1.464 per ounce once the resistance level at $1.433 and $1.447 has been cleared.

Soybeans have also seen a parabolic move to the upside. After trading within a channel for several months, it appears that this commodity may be poised for further moves to the upside. Currently other commodities such as coffee and sugar are also looking interesting from a charting perspective.

It would be interesting to see if commodities across the board continue their subsequent trends over the next few weeks as there could be further potential opportunities to jump on board the underlying trends.