Sunday, January 4, 2015

Agricultural Commodities (DBA): A Brewing Rally?

Agricultural Commodities ETF (DBA) is in a downtrend since May 2014.During the previous week price broke down below the pivot point @ 25$ and is moving fast down.At first glance this is a bearish event...

..BUT you can notice that during the last test of 25$(17/12/14) there was a wide price range (wide price spread) with Low volume (green circle) suggesting low participation of smart money to a possible further downmove.
Also the recent breakdown was accompanied by slight increase in volume (blue circle).Next support area is 24-24,5$.

Taking into account the previous observations we believe that, unless we see a substantial increase in volume during down days,  there is a good possibility that the current down move is a fake one.We believe that DBA (which BB width is very compressed, and BB have just started to expand) is ready for a big move.First a bounce @ around 24,3 and then rally towards 26 and possibly further up.