Top Story

The CRB Index Paints A Bleak Picture For Commodities | Silver, Natural Gas

Trade wars are clearly taking their toll on markets. Yet the bigger picture for the CRB index (and therefor its components) suggests it may have seen a cyclical top.

Whilst the bleeding on equities has slowed to a degree, the weakness among commodities overall cannot go unnoticed. For this we can take a broad look at a commodity basket called the Thomson Reuters CoreCommodity CRB, which is made up of 19 components and essentially the Dow Jones Industrial Average for commodities. Whilst energy accounts for the largest sector within the index at 39%, agriculture is close behind at 34% and metals is just 20%. However, whilst the ongoing trade war between US and China persists, agriculture and metals are arguably going to face the most pressure within the index.


On the daily chart we can see the CRB index has broken a bullish trendline, plummeted -6.6% and printed a lower since its 189.68 high. Since finding resistance at the 20 and 50-day eMA’s and 183 lows, price action has been reminiscent of a swing trade. Furthermore, the longer-term picture suggests the 189.68 swing could be significant and comparable to the 201.72 and 206.95 highs, all of which have been followed by a death cross from the moving averages. If so, it suggests some commodities could break to new lows.


Of the 19 CRB components, here are the available markets via forex.com (dependant on region). Below are two markets which we have a bearish bias on over the near-term, until key levels of resistance break.




Silver: The daily chart has been grinding lower since mid-February, yet last week prices saw a clear break of key support at $14.56. With prices now consolidating beneath this key level, we’re looking for bearish momentum to return and break it out of compression. A clear break above $14.56 places it on the backburner, although the trend remains technically bearish below. Gold could also be looking to break lower, so check out yesterday's gold post by by colleague Fawad Razaqzada: Gold on the brink.  



Natural gas: The four-hour chart has seen a breakout of its bearish channel. Prices appear over-extended to the downside over the near-term, but bears could look to fade into rallies. Ideally any rebound will remain beneath the 2.57 low, however we could also use the broken channel as a rising resistance line to fade into if necessary (or await bearish momentum to return after respecting a key level).


Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

The markets are moving. Stop missing out.

Open an Account