Commodities Outlook 2021: Will the supercycle last?
inflation level in US is very modest. No sign of hyperinflation.
supercycle means commodities demand rise. usually last for 20 years
US dollar tends to have an inverse relationship with commodities prices
Commodities might increase after pandemics. Also due to the weather and China demand.
Corn is overpriced. Thus wheat demand is more favourable.
Here, bean is more favourable than corn, as corn is overpriced.
Jun-Aug price changes are negative. Prices usually increase in December. But 2021 is different.
This hows supply is tight and demand is strong.
These graphs show we are in a bullish market. Prices are lower.
Technical overview:
200 EMA — a year data
You don't want to go against the primary trend as it will also mean you are going against the market.
use 9 EMA and 20 EMA to identify entry and exit levels.
Whenever the shorter-term EMA crosses above the longer-term EMA, means the market is bullish
Whenever the longer-term EMA crosses above the shorter-term EMA, means the market is bearish
Heiken Ashi chart (left graph) will help you to average the bars and you can clearly see if it is an uptrend or downtrend. Compared to candlestick chart (right graph).
ATR — average through range indicator
It indicates the range of the market for the past days. Usually past 14 days data.
For instance, corn ATR is 15, you have to position 15 cents as your stop loss level. You can do a risk-reward ratio of 2:1 and your profit target will be 30 cents.
ATR level is important in telling you when to exit the market. If ATR is rising, means volatility has increased in the past couple of days. You must be prepared for a huge swing in the market.
There is a possibility it will reach $7.
There is consolidation and breakout will be most likely uptrend. It may reach $64/$68 level.
The key factor is the weather. If the weather is bad, prices will rise (low supply). If the weather is good, Brazil can produce more soybean and prices will drop.
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