Technical analyst Chris Kimble looks at commodities’ recent surge and finds potential for another leg higher.
The chart above looks at the Thomson Reuters Equal Weighted Commodity Index over the past 50-years, on a monthly basis.
The index has spent the majority of the 40-years inside of rising channel (1). While inside of this rising channel the index has spent the majority of the past 7-years inside of falling channel (2).
The index hit the bottom of the channel back in 2016 and a small rally has followed, where it has reached its 23% Fibonacci retracement level of the 7-year decline and created a series of flat tops.
The index now finds itself in a very tight spot between falling resistance and rising support. What this important commodity index does with the jam the tight jam, should send a very important long-term message for this sector (Crude Oil, Metals and Grains).
The PowerShares DB Com Indx Trckng Fund ETF (DBC) was unchanged in premarket trading Tuesday. Year-to-date, DBC has gained 3.79%, versus a 0.18% rise in the benchmark S&P 500 index during the same period.
This article is brought to you courtesy of Kimble Charting Solutions.