Rewind to March 2020 and things weren’t looking so good for commodities. COVID-19 was in the news and several assets were trading sharply lower.
Then came the comeback. And in a big way. Perhaps even concerning way when you fast forward to today.
As you can see in today’s “weekly” chart of the CRB Commodity Index, price has remained within a broad downtrend channel (marked by each red line).
But as you can see, an overheating economy and supply issues have pushed the commodity index to new 5 year highs. And it is testing its overhead trend resistance line. A breakout would be bullish for the broader commodity markets, but would also be a concerning inflationary signal.
On the flip side, the Rate Of Change (ROC) indicator is warning that commodities have traveled too far, too fast… and a pullback could be around the corner. The last two times commodities rallied nearly 50% in a year, they cooled off for several months.
Will it be different this time around? Stay tuned!
This article was first written for See It Markets.com. To see the original post CLICK HERE.
