Commodities Price Index Overheating At Important Resistance!

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by Kimble Charting

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).

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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.

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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!

 

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