Commodity company Glencore plc ( GLNCY) has had some issues in the past, but I am not going to charge them nor defend them for any past "sins." I want to look at the charts of GLNCY as a window into the possible future of commodity prices.
Investors in this trading giant should have a longer-term view of the markets than short-term futures traders. Let's check.
In the daily bar chart of GLNCY, below, we can see that prices have made a small double-top pattern in April and June. I use the word "small" in that the double tops I have seen over the years take several months and not several weeks. The pattern is right but its significance is less. Prices have broken below the rising 200-day moving average line and below the May lows.
The trading volume increased on the break of the long-term moving average telling us that some traders have noticed and acted on that technical signal. The On-Balance-Volume (OBV) line has weakened the past four months. The 12-day price momentum study made a lower low in June versus May so we don't have a bullish divergence yet.
In the weekly Japanese candlestick chart of GLNCY, below, we can see a mixed picture. The share have broken below the 40-week moving average line. Prices are approaching a band or zone of potential support (buying interest) in the $9 to $8 area from 2021. The latest weekly candle is a doji suggesting that there is now a balance between bulls and bears.
The weekly OBV line is still pointed down and the 12-week price momentum has not slowed.
In this monthly Japanese candlestick chart of GLNCY, below, we can see the price action back to 2011. The rally this year broke the high of early 2018 for a breakout of a huge double bottom pattern. Potential support in the $9-$8 area is visible but it remains to be seen whether investors will be buying there.
In this daily Point and Figure chart of GLNCY, below, we can see that prices have reached and exceeded a downside price target of $10.
In this second Point and Figure chart of GLNCY, below, we used close only price data with volume by price data on the left scale. This chart shows a lot of potential support just below the market where I would anticipate that forward-looking investors become buyers. We'll see.
Bottom-line strategy: In the 1960s and 1970s the commodity trading giant was Phillip Brothers. Today it is Glencore. If you take the view that commodity prices are in a longer-term up cycle and that the latest weakness is temporary then GLNCY should stabilize and rebase in the weeks ahead. Patient investors could probe the long side in the weeks ahead.
