The Panamax technical is starting to show mean reversion gaps, not a sell signal but it does suggest that price action is over extended. However when looking at the Elliot wave on the rolling futures contracts it would appear that after a corrective phase there is potentially another bullish impulse wave to come on the daily charts.
Elliot wave works in cycles. The current cycle is on a leg 5 (weekly), and at some point in the near future we are due to enter a corrective phase. What we know as bull and bear markets are really just Elliott wave cycles. On completion of this current cycle this doesn’t have to mean that we are entering into long term bear market conditions. It usually signals the end of a wave to one greater degree. If this is the case then based on the last 10 years, there is the potential that we are only in the infancy of a much larger cycle.
Panamax Index Weekly
Support – 10,517, 10,326, 10,223
Resistance – 11,451, 11,536, 13,740
Like the Cape index the seasonality for January tend to be weak, and this has been the case this year. Technically the index is making lower lows and lower highs, indicating that we are currently in a corrective phase. We also remain below the 34 period EMA and the 50 period SMA, but above the longer term 200 period MA. This would suggest that the near term trend is currently corrective, but the longer term trend is not yet bearish.
A close above USD 11,451 would create a fresh market high. From a swing trading perspective this would flag that the current trend could be basing. However a higher low would be needed to confirm this.
Likewise a close below USD 10,517 would create a lower low and this\ could have bearish connotations going forward. However, the 200 period moving average at USD 10,326 is often regarded as a support and resistance level. If this holds than it could attract technical buyers to the market, regardless of a fresh market low.
Technically in a corrective phase, fresh market lows would be a 5th wave down making the 200 period MA a key focal point.
Panamax Feb 18 Daily
Support – 10,960, 10,765, 10,060
Resistance – 12,030, 12,062, 12,865
Price action on the Feb futures remains above key moving averages indicating that the current trend is in bullish territory. This is supported by higher highs and higher lows on the daily chart. Upside Fibonacci resistance is at USD 12,062 with further resistance at USD 12,865. Support is at the recent low at USD 10,960 with secondary support at USD 10,765.
The current bullish phase started in November 2017 on the Feb contract, however, when you look at the rolling front month (chart displayed) it would suggest we are coming out of a longer term corrective phase. It appears there is a bullish inverse head and shoulders pattern forming, giving a longer term Fibonacci target of USD 13,645.
The head and shoulders pattern is part of an Elliot wave structure, we appear to be entering into a leg 3 impulse wave (it looks to be leg 3 of leg 5 to 1 greater degree), however price action below USD 11,260 would negate this bullish formation.
Panamax Q2 18 Daily
Support – 12,625, 12,315
Resistance – 13,186, 13,725
The Q2 Panamax remains above short and medium term moving averages, keeping the technical in bullish territory.
Fibonacci resistance can be found at USD 13,186 and USD 13,725.
These levels are based off projected levels from the high/low on the 14/12/17 – 4/1/18, projected from the low on the 9/1/18.
The stochastic is showing a bearish divergence. Not a sell signal, the divergence does warn of weakening upside momentum. We also see a mean reversion gap forming from the 50 period MA, again another technical signal that would imply that this current move is looking overextended.
Market pullbacks that close below the USD 12,625 would create a lower low in the market, and negate the current bull move, indicating that we could be entering a corrective phase.
From an Elliot wave perspective on the rolling 1Q forward, we are now on a leg 5 on the weekly chart that started in October 2017.
However the count on the daily chart would suggest that we are on leg 5 of leg 3 to one lesser degree. This opens the possibility that although the market looks technically overextended, we have the potential for 1 more wave up after the next corrective phase.
Panamax Cal 19 Daily
Support – 11,470, 10,265, 9,860
Resistance – 11,565, 11,983
Like the rest of the other Panamax futures contracts the trend remains in bullish territory and above its moving averages. A mean reversion gap has now formed between price and the 50 period MA. Not a sell signal it does warn that price action is looking a little overextended at these levels. However, we continue to see higher high and higher lows within the trend.
From an Elliott wave perspective we can see 3 bullish impulse waves dating back to the 15/11/17. However the corrective phase in early January was very short, suggesting that we remain in a current leg 3 on the daily chart.
From a technical perspective the weekly trend in the Cal 19 futures is on its 3rd and final impulse wave within an Elliott wave sequence.
Within this 5th and final wave we appear to be on leg 3 of leg 5 (daily chart). This would suggest that after the next corrective phase we should enter a final bullish impulse wave before entering into a longer term corrective phase. Note this does not necessarily mean bear market, as this is possibly part of a larger cycle.
source: Hellenic Shipping News.