The strength in the US Dollar has an inverse effect to the commodities as investors flee from what is widely perceived as ‘safe heaven’ back into equities and the greenback; these are natural cycles in the financial markets. Whether the decade bull market run on the commodity market is coming to an end or not is too far for my telescope to reach but on the near term horizon the commodity index is clearly forming a bearish double top reversal pattern and its’ RSI negative divergence confirms this bearish top pattern.
A breakdown from this double top coupled with a bearish cross-over of its’ MACD below centerline presents ‘shorts trading opportunities’. The index first wall of support is its’ 2006 historic high which looks tough for the market to penetrate on first attempt hence it may be prudent for traders to cover short positions near this level; however, a break down from this support will accelerate the downtrend.
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