REUTERS TECHNICAL ANALYSIS Q2 OUTLOOK 2013 - WANG TAO

Gold is poured into a mould during processing at the PT Antam Tbk. precious metal refinery in Jakarta.REUTERS/Beawiharta (INDONESIA)
REUTERS TECHNICAL ANALYSIS Q2 OUTLOOK 2013 - WANG TAO
Commodities will be bearish in the second quarter. WTI and Brent will resume their downtrends after moderate gains. Gold and
silver seem to have been discarded by crazy bulls. Base metals are riding on clear downtrends. A powerful downward wave C
may make LME copper the biggest loser. Soybeans have completed their four-month consolidation and are poised to drop
more. Wheat and corn may depart in their moves, with the latter sliding faster. Softs are no exception to the bearish market
sentiment. Sugar, coffee and cocoa are steady on long-term downtrends.
** Wang Tao is a Reuters market analyst for commodities and energy technicals. The views expressed are his own. No information in this analysis
should be considered as being business, financial or legal advice. Each reader should consult his or her own professional or other advisers for business,
financial or legal advice regarding the products mentioned in the analyses. **
1

SPOT GOLD TO RETEST SUPPORT AT $1,550 IN THREE MONTHS
2
Spot gold is expected to retest a support at $1,550 per
ounce over the next three months, with a good chance of
breaking this level and falling more to $1,491.
The support is provided by the 61.8 percent Fibonacci projection
level of a downward wave C, which started at the
Oct. 5, 2012 high of $1,795.69.
This wave is capable of travelling to $1,491, its 76.4 percent
projection level, based on the length of the preceding wave
A which fell from the Sept. 6, 2011 high of $1,920.30 to the
Dec. 29, 2011 low of $1,521.94 and the peak of the wave B
at $1,795.69.
There will be seven waves making up the wave C. Altogether,
these waves will form a double-zigzag pattern
within a falling channel, the lower channel line of which
points to $1,491 as well.
The rebound from the Feb. 21 low of $1,554.49 is labelled
as a wave b, to be followed by a downward wave c which
will unfold towards $1,491.
The wave b may have peaked at the March 21 high of
$1,616.36. Alternatively, it will be capped below $1,644, a
38.2 percent projection level, should it rise more from the
current level.

SPOT SILVER TO DROP TO $26.39 IN 3 MONTHS
Spot silver is expected to drop to a support at $26.39 per ounce over the next
three months, a break below which will lead to a further loss to $23.63.
It is obvious that silver is firm on a long-term downtrend developing from the
April 28, 2011 high of $49.51, as indicated by the lower highs at $44.14,
$37.46 and $35.36, respectively touched on Aug. 23, 2011, Feb. 29, 2012 and
Oct. 1, 2012.
A short-term downtrend starting from $35.36 has been similarly characterised
with apparent higher highs and lower lows.
This trend has been confined within a falling channel, the lower channel line
of which points to a target at $23.63, the 50 percent Fibonacci projection
level of a wave C which has been driving silver down from $35.36.
A study on the fall from $35.36 reveals a double-zigzag wave pattern, which
consists of seven waves labelled a-b-c-x-a-b-c.
Even though it is not very clear if the current wave b has completed, it is certain
that the second wave c will totally reverse this wave b and unfold towards
$26.39.
A rise above $29.40 will signal an extension of the wave b towards $30.20.
3

U.S. OIL TO RANGE FROM $90 TO $100.49 IN THREE MONTHS
U.S. oil is expected to range from $90 to $100.49 per barrel over the next
three months, as its consolidation within a wedge has not completed.
The pattern started from the May 2011 high of $114.83 and has a range of
$74.95-$114.83. Its lower trendline points to $80, which indicates an eventual
completion around this level.
The rise from the June 28, 2012, low of $77.28 has peaked at a resistance of
$100.49, the 61.8 percent Fibonacci retracement on the fall to this low from
$114.83. Oil failed to reach this resistance in its second attempt.
The failure, along with the preceding and the subsequent retracements, suggests
the formation of a triangle.
This pattern consists of five waves labelled a, b, c, d and e, and has adopted
the 0.618 ratio in its construction, as revealed by two Fibonacci retracement
analyses.
Given that the triangle appeared after a downtrend, it has a strong bearish
indication, likely to be followed by another downtrend after the wave e ends
around $98.11.
Oil will face the resistance at $100.49 again if it could rise above the upper
trendline of the triangle, which is about $98.11.
A surge above $100.49 will be extended to $105.97, a 76.4 percent retracement,
while a drop below $89.42 will confirm the completion of the triangle
and an immediate target will be $84.05, the Nov. 7, 2012, low.
4

BRENT OIL TO DROP TO $103.92 IN THREE MONTHS AFTER A REBOUND
Brent oil is expected to rebound to $111.53 per barrel before resuming its
downtrend towards $103.92 over the next three months.
Oil is riding on a downward wave C which started at the Feb. 8 high of $119.17.
It is the third wave of a big three-wave cycle that fell from the March 1, 2012
high of $128.40.
A Fibonacci projection analysis reveals a target of the wave C at $103.92, the
38.2 percent level. But it won't be a surprise should oil drop more to $99.22,
the 50 percent level, or to $94.51, the 61.8 percent projection level, as the
wave C has a fierce character.
The first phase of this wave C could have ended around a support at $107.45,
the 38.2 percent Fibonacci retracement on the rise from the June 22 low of
$88.49 to $119.17, as there is a completion of a five-wave cycle on the fall
from $119.17 to $106.80.
The bullish divergence on the daily RSI has confirmed the completion of the
cycle.
A Fibonacci retracement analysis on the fall from $119.17 to $106.80 reveals a
rebound target at $111.53, the 38.2 percent level, a break above which will
lead to a further gain to $112.99, the 50 percent level.
5

LME COPPER TO DROP TO $6,988 IN THREE MONTHS
LME copper is likely to fall to $6,988 per tonne over the next three months,
driven by a downward wave C.
Strategically, the target will be confirmed when a low of $7,486.25 is broken.
This wave started at the February 4 high of $8,346 and will extend a downtrend
that developed from the February, 2011 high of $10,190.
A Fibonacci projection analysis reveals support at $7,507, the 23.6 percent
level, which has temporarily stopped the wave C and caused a moderate rebound.
This rebound from the March 19 low of $7,486.25 is expected to end below
$7,715, the 38.2 percent Fibonacci retracement on a five-wave cycle that fell
from $8,346 to this low.
The wave C will then resume towards $6,988.
It would not be surprising if the wave C travels to $6,149, its 61.8 percent projection
level, as the following drop would be much sharper than the one from
$8,346 to $7,486.25.
The preceding wave B has taken the shape of a triangle, which has been confirmed
as bearish, as its lower trendline was broken. This pattern indicates the
same target at $6,149.
6

LME ALUMINIUM TARGETS $1,639-$1,688 RANGE IN 3 MONTHS
LME aluminium is expected to drop into a range of $1,639-$1,688 per tonne
over the next three months, as indicated by its wave pattern and a Fibonacci
ratio analysis.
A downtrend from the May 2011 high of $2,803 was interrupted by a rebound
from the Aug. 16, 2012 low of $1,827.25, which had been caused by a support
at $1,861, the 61.8 percent Fibonacci retracement on the rise from the Feb. 24,
2009 low of $1,279 to $2,803.
The rebound has completed at the Feb. 15 high of $2,174, as it consists of a
standard three-wave cycle.
The downtrend has resumed, driven by a wave C, which is unfolding towards
$1,688, its 50 percent Fibonacci projection level, a drop below which will be
extended to $1,639, a 76.4 percent retracement.
The 38.2 percent projection level at $1,802 will provide a support, along with
the other support at $1,861, to form a support zone, which will briefly stop the
wave C.
Aluminium has a nonstop drop from $2,174. The only obvious rebound in the
fall is from the March 11 low of $1,935 to the March 13 high of $1,996.25, and
this rebound is viewed as a pullback towards the trendline ascending from
$1,827.25.
Given the strong bearish momentum, there might not be any decent rebound
in future until aluminium reaches $1,861.
7

SHANGHAI COPPER TO FALL TO 49,250-50,250 YUAN RANGE
8
Shanghai copper is expected to drop to a range of 49,250-
50,250 yuan per tonne over the next three months, as indicated
by its wave pattern and a Fibonacci ratio analysis.
A downward wave C starting from the Feb. 4 high of
60,000 yuan is advancing towards its 38.2 percent Fibonacci
projection level at 50,250 yuan, the high end of the
target range.
A Fibonacci retracement analysis on the rise from the Dec.
26, 2008 low of 22,210 yuan to the Feb. 15, 2011 high of
76,290 yuan reveals the low of the target range at 49,250
yuan, the 50 percent level.
Confirming the progress of the wave C is a bearish triangle,
which started from the Oct. 21, 2011 low of 50,760 yuan
and ended at 60,000 yuan, as it could be further broken
down into five waves labelled a, b, c, d and e.
The triangle is considered as a continuation pattern, which
indicates the preceding downtrend will continue.
Strategically, the target range will be confirmed when copper
drops below a support at 53,980 yuan, the 23.6 percent
projection level, as it still hovers above the lower
trendline of the triangle.

PALM OIL TARGETS 1,953 RINGGIT IN THREE MONTHS
Malaysian palm oil is expected to fall to 1,953 ringgit per tonne over the next
three months, as indicated by its wave pattern and a Fibonacci ratio analysis.
A downtrend from the April 10, 2012, high of 3,628 ringgit has been driven by
a wave C, which was temporarily stopped by a support at 2,338 ringgit.
The support was provided by the 61.8 percent Fibonacci retracement on the
rise from the October 2008 low of 1,331 ringgit to the February 2011 high of
3,967 ringgit.
A rebound caused by this support has apparently failed to go above a resistance
at 2,649 ringgit, which is provided by the 50 percent retracement, and
the wave C may have resumed.
A Fibonacci projection on the target of the wave C points to 1,952 ringgit, the
138.2 percent level, which coincides with the 76.4 percent retracement at
1,953 ringgit.
The wave pattern on the daily chart indicates the wave C could be further broken
down into five smaller waves labelled (1), (2), (3), (4) and (5).
The wave (5) is unfolding towards 1,952 ringgit. It will also consist of five
smaller waves. The first two waves, the wave (5)-1 and (5)-2, could have completed.
Strategically, the target at 1,952 ringgit will be confirmed when the trough of
the (5)-1 at 2,360 ringgit, the March 14 low, is broken.
The resistance is at 2,593 ringgit, a break above which may lead to a further
gain to 2,752 ringgit.
9

CBOT SOYBEANS THREE-MONTH TARGET AT $12.85-1/2
CBOT soybeans are expected to drop to $12.85-1/2 per bushel over the next
three months, as they are poised to clear a support at $14.05-1/2.
The support is provided by the 38.2 percent Fibonacci retracement on a fivewave
cycle that rose from the December 2008 low of $7.76-1/4 to the September
2012 high of $17.94-3/4.
The downtrend from $17.94-3/4 is far from complete, as it may eventually
extend to $11.65-1/4, the 61.8 percent retracement, which is close to the
trough of the wave 4 at $10.94-1/4.
The rebound from the Nov. 16, 2012 low of $13.72-1/4 consists of three small
waves labelled a, b, c. The three-wave mode confirms the incompletion of the
downtrend.
A more realistic target will be $12.85-1/2, the 50 percent retracement.
A detailed study on the fall from $17.94-3/4 reveals that an (a)-(b)-(c) corrective
wave cycle is progressing towards $12.55-1/2, the 61.8 percent Fibonacci
projection level of the wave (c), based on the length of the preceding wave (a)
and the peak of the wave (b) at $15.16-3/4.
It seems soybeans may drop below $12.85-1/2, to reach $12.55-1/2 next quarter.
Strategically, the target at $12.85-1/2 will be confirmed when the Jan. 4 low
of $13.78 is broken.
10

CBOT CORN TO DROP INTO $6.34-3/4 TO $6.46-1/2 RANGE IN 3 MTHS
CBOT corn is expected to drop into a range of $6.34-3/4 to $6.46-1/2 per
bushel over the next three months, as indicated by its wave pattern and a Fibonacci
retracement analysis.
A long-term uptrend from the Nov. 30, 2005 low of $1.85-3/4 has reversed
after it peaked at the Aug. 10, 2012 high of $8.43-3/4 after about six years of
development.
A Fibonacci retracement analysis on this trend has confirmed the bearish reversal,
as the drop from $8.43-3/4 paused around a support at $6.88-1/2,
the 23.6 percent level.
That means a long-term downtrend is establishing, which may last one year,
if it is sharp, or three years, if it is weak, based on the duration of the preceding
uptrend.
Prior to this support was another one at $7.14-1/2, the 23.6 percent Fibonacci
retracement on a medium-term uptrend that rose from the Sept. 8, 2009 low
of $2.96-3/4 to $8.43-3/4.
Even though both the supports have triggered rebounds, the downtrend remains
intact.
The next support is at $6.34-3/4, the 38.2 percent retracement on the medium-term
trend, a break below which will lead to a further loss to $5.92-1/2,
another 38.2 percent retracement on the long-term trend.
A Fibonacci projection analysis reveals a conservative target at $6.46-1/2, the
61.8 percent projection level of a downward wave (c), which started at the
March 14 high of $7.49.
This level should not be ignored, as the preceding (a) has been structured
with the 0.618 ratio and the wave (c) may stop at $6.46-1/2.
11

CBOT WHEAT TO RANGE FROM $6.86-1/2 TO $7.48 IN 3 MTHS
CBOT wheat is expected to consolidate in a range of $6.86-1/2 to $7.48 per bushel over the next three months, as indicated by a Fibonacci retracement
analysis.
A three-wave cycle that started at the June 2010 low of $4.25-1/2 has peaked at the July 23 high of $9.47-1/4, and the Fibonacci retracement analysis
reveals a support at $6.86-1/2 and a resistance at $7.48, the 50 percent retracement and the 38.2 percent retracement respectively.
Only a break below $6.86-1/2 could result in a further loss to $6.24-3/4, the 61.8 percent retracement.
However, the break may not occur so soon, as the rebound triggered by the support will continue, due to the completion of a five-wave cycle on the
daily chart.
The cycle fell from the Nov. 9, 2012 high of $9.16-1/2, and bottomed at the March 7 low of $6.73-1/4. The rebound from this low is driven by a wave
(4), which will consist of three smaller waves labelled a, b, c.
The wave a is expected to end around $7.48, to be followed by a downward wave b, which will be reversed by an upward wave c.
At the completion of the wave c, a downward wave (5) will take over to drive wheat towards $6.86-1/2 first and then towards $6.24-3/4.
Wheat and corn tend to move to the same rhythm, but it seems over the next three months, wheat will be sideways while corn will drop.
This is indicated by the widening spread between them, as the spread has approached a historical low of negative $0.61 which was touched in 1996,
it may bounce up from the current level.
12

NY SUGAR TO FALL INTO 16.17-16.48 CENTS RANGE IN 3 MONTHS
New York sugar would drop into a range of 16.17-16.48 cents per lb over the
next three months, as indicated by its wave pattern and a Fibonacci ratio
analysis.
The drop from the February 2011 high of 36.08 cents is against a preceding
three-wave cycle that started at the May 1999 low of 4.36 cents.
A Fibonacci retracement analysis on the cycle reveals sugar has broken below
a support at 20.22 cents, the 50 percent level. The next support will be at
16.48 cents, the 61.8 percent retracement.
The current drop has adopted a three-wave mode, with the third wave, the
wave C, progressing towards 16.17 cents, its 100 percent Fibonacci projection
level, as the 76.4 percent projection level at 19.87 cents has been broken.
Since August 2012, the monthly candlesticks have been either black or dojis,
indicating a prevailing bearish market sentiment.
On the weekly chart, sugar has never been successful in breaking above a
trendline that descends from 36.08 cents. This intact trendline indicates a
steady long-term downtrend.
A lower trendline parallel to the upper trendline even points to a very aggressive
target range of 13-14 cents, which might be reached over a longer period.
13

NY COFFEE TO DROP INTO $1.0720-$1.1590 RANGE IN 3 MTHS
New York coffee is expected to drop into a range of $1.0720-$1.1590 per lb over the next three months, as it has cleared a support at $1.4575.
The support was provided by the 61.8 percent Fibonacci retracement on the rise from the October 2001 low of $0.4490 to the May 2011 high of
$3.0890.
The next support seems to be at $1.0720, the 76.4 percent retracement.
A sudden surge above $1.4575 will indicate a false break below this level, and a bullish target at $1.7080 will be established.
The downtrend from $3.0890 has been driven by five waves, and the current wave (5) may reach $1.1590, based on the presumption that this wave
will be equal to the wave (1) in length.
On the daily chart, coffee is riding on a wave iii or wave c, the third wave of the wave 5.
A Fibonacci projection analysis reveals a target at $1.1350, the 100 percent level, which falls within the range of $1.0720-$1.1590.
A drop below this range will be extended to $0.9550, the 138.2 percent projection level.
14

NY COCOA TARGETS $1,431-$1,600 RANGE IN THREE MONTHS
New York cocoa is expected to test a support at $1,879 per tonne over the
next three months, a break below which will lead to a further loss into a range
of $1,431-$1,600.
A downtrend from the March 2011 high of $3,775 has resumed, after a disruption
by a rebound from the December 2011 low of $1,983.
The rebound was caused by a support around $2,050, which is provided by a
trendline ascending from the December 2000 low of $707. This trendline has
been eventually broken, confirming a continuation of the downtrend.
The next support will be at $1,879, which is established by the 61.8 percent
Fibonacci retracement on the rise from $707 to $3,775. A break below $1,879
will open the way towards $1,431, the 76.4 percent retracement.
A detailed study on the wave pattern in the fall from $3,775 reveals that a
downward wave (c) is unfolding towards $1,600, its 61.8 percent Fibonacci
projection level.
The preceding wave (a) consists of three smaller waves labelled a, b, c, and
the wave c is 1.382 times as long as the wave a.
This ratio suggests the current wave (c) may not stop at $1,600, instead, it
may travel a longer distance than the wave (a), to eventually go below $915 -
the 100 percent projection level, over a longer period of time.
15

BALTIC DRY INDEX TO RISE TO 1,162 IN 3 MONTHS
The Baltic dry index is expected to rise to 1,162 over the next three months, as
a triple-bottom could have formed around a support at 663, the Dec. 5, 2008
low.
Three bottoms are at 647, 661, and 698, respectively touched in February
2012, September 2012 and January 2013. The neckline of the pattern is at
1,162, a high touched in July 2012.
The index has to go up, simply because a target at 112 will be established if it
drops below 647, and this target makes little sense given that the lowest level
over the past 26 years was 554 hit in 1986.
A rise above 1,162 will confirm the triple-bottom, with a bullish target at
1,700.
The drop from the Nov. 28, 2012 high of 1,104 to 698 has been almost reversed
61.8 percent, as indicated by a Fibonacci retracement analysis. This
reversal has significantly increased the chance of the 1,104 level to be touched
again.
For a chart: http://link.reuters.com/dyd96t
A drop from the current level may be limited to 853, the 38.2 percent retracement.
16

DOLLAR INDEX TARGETS 87.027 IN THREE MONTHS
Reporting by Wang Tao (Market Analyst, Commodities Technicals),
wang.tao@thomsonreuters.com;
Compiled by Newsletters Team in Bangalore, commodity.briefs@thomsonreuters.com
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17
For more information:
The dollar index is expected to retest resistance at 84.288
over the next three months, with a good chance of breaking
above this level and rising towards 87.027.
The resistance is provided by the 61.8 percent Fibonacci
projection level of an upward wave C which started at the
May 2011 low of 72.696.
A deep correction triggered by this resistance has found a
support at 79.862, the 38.2 percent retracement. The correction
seems to have completed, based on its duration
and depth.
The speed of the rise from the Feb. 1 low of 78.918 confirms
the resumption of the wave C.
This wave could be subdivided into three smaller waves
labelled (a), (b), (c), with the fierce wave (c) unfolding towards
84.288.
A failure to break the resistance will signal an extension of
the wave (b) towards 81.49, a level pointed by the lower
line of a rising channel.
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