Long Term CRB Index Forecast31/03/2017 13:19


The CRB Index is an index of 19 commodity futures and weighted most heavily in Energy and Agriculture. Looking over the weekly chart, I see a potentially large upside move developing. The CRB index sold off aggressively from June 2014 to the recent lows in January 2016 without any significant rallies. It put in a double bottom during that time, which help kickstart higher prices. Over the course of the next 12 months it managed to form a measured move (MM) breakout. This MM had a shallow retracement, which is bullish, but had 8:24 left-handed skewing. The leg up off the August 1st low had 2 MM patterns with deep retracements. The left-handed skewing of the main MM pattern along with the 2 MM patterns with deep retracements created weak upward momentum and helps explain why prices were not able to push much higher. So a pullback was to be expected. In these situations, a pullback support zone can present itself between the 38/78 retracement levels indicated on the chart below. Prices traded into this zone (182.7734 to 180.5094) and found some support. Helping the case was the dominant MM pattern on the Jan 2017 leg down. It had a medium deep retracement, which is weak, and created a 361 Fib extension into the pullback zone @ 181.6392. The low was 181.5533. Since trading higher, on March 21st there was a bullish MACD crossover on the daily chart. My long term forecast is for prices to reach 217.7016 BEFORE falling below 176.6698, which is the pattern failure level. A move up to the 217.7016 area is a big move and I would expect it to take 6 to 12 months. Long term patterns in many of the index components also predict higher prices. This will be something to keep an eye on for the next few months to see if the 176.6698 level can indeed hold.


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