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Technical Report Global Leader Dry Bulk Derivatives

Source Bloomberg

Capesize 5 TC February Futures 2017

• Daily Close US$ 8,8,20

• RSI 89

• MACD Bullish the histogram is widening

• S1 US$ 8,822

• S2 US$ 7,810

• R1 US$ 10,030

• R2 US$ 12,250

Verdict – The close above the high of the 3-1-17 at US$ 7,883 signalled a

technical breakout to the buy side for the Capesize February FFA. This also

put price action above the weekly pivot point, signalling a bullish bias to

the market.

We continue to remain above the key 50 period simple moving average

(MA) and the 34 period exponential moving average (EMA). This again

supports the bullish technical at this point.

The slow stochastic at 91 is now in an ‘overbought’ zone. However this

can equally signal that we are about to enter a trading environment and

should not be used a sell signal without other technical confirmations. It is

worth noting that we are showing signs of a bearish divergence; again, a

warning and not a sell signal.

Technical resistance is at US$ 10,030 and US$ 12,250 as these are pivot

resistance levels. We note an interim resistance at US$ 10,362 which is a

161.8% Fibonacci projection level. A rejection of any of these resistance

levels would suggest a short term correction is in play rather than a longer

term correction based off the bullish technical.

A close below US$ 7,810 would suggest that we could trade back to the 34

period EMA at US$ 6,834.

• Daily Close US$ 8,450

• RSI 64

• MACD Bullish the histogram is widening

• S1 US$ 8,168

• S2 US$ 7,555

• R1 US$ 8,953

• R2 US$ 9,700

Verdict – Technically the Capesize Q2 17 FFA is in bullish territory with

pricing above the weekly pivot point, the 50 period MA and the 34 period

EMA.

The stochastic has now crossed the 50 line, confirming that the indicator

has now moved into bullish territory.

A close above US$ 8,450 would imply that we could once again look to

test the recent high of US$ 8,953 from the 3-1-17. A close above this level

would be classed as a bullish breakout and US$ 9,700 would be the next

logical target from here.

A close below the weekly pivot point (US$ 8,168) would have bearish

implications for the Q2 FFA’s and put the recent low of US$ 7,555 as the

next technical point of interest.

US$ 7,500 (a level not shown on this chart) is also a key level of support

as this is the current base of the daily cloud Chart (Ichimoku chart) and a

close below here would signal the end of the bull and put US$ 7,150 as the

next technical support.

Technically bullish, caution on a close below the US$ 8,168 as this would

suggest the balance of power could be shifting to the sell side.

Capesize 5 TC Q2 Futures 2017

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Technical Report Global Leader Dry Bulk Derivatives

‘Risk Disclosure: Trading derivative products such as swaps, futures and options carries with it a substantial risk of loss. Transactional fees such

as broker commission and clearing costs will be applied and these can vary depending on the type of product traded as well as the venue used

for execution. These products are not suitable for all investors. For any further information or to discuss the use of these products please speak

to your broker or relationship manager.’

Capesize 5 TC Cal 18 Futures

• Daily Close US$ 10,930

• RSI 61

• MACD Bullish the histogram is widening

• S1 US$ 10,750

• S2 US$ 10,525

• R1 US$ 11,103

• R2 US$ 11,316

Verdict – the longer term technical (Weekly chart) in the Cal 18 5 TC FFA

remains in bearish territory, with resistance at US$12,255.

The near term technical however is telling a different story. The FFA

price is above both the weekly and monthly pivot levels implying that

the market is leaning towards a short term bull bias.

The close on the 22-12-16 was above the long term resistance at US$

10,679. This signalled a change in sentiment for the Cal 18 FFA, with the

recent pull back finding support above the previous low (US$ 10,473)

and the 34 period EMA.

The close above the US$ 10,828 high on the 3-1-17 would suggest that

we have further to go to the upside. As we are now making higher highs

and higher lows.

Technical resistance can be found at US$ 11,103 and US$ 11,316, with

the secondary resistance being the recent high and the near term target.

A close above here would signal as a technical breakout and put the

longer term target of US$ 12,255 in the sights of the buy side market.

A close below US$ 10,750 would suggest we should once again look to

test the US$ 10,525 with US$ 10,050 being a longer term downside

target if broken.

Capesize 5 TC Index - Weekly

• Weekly Close US$ 9,279

• RSI 53

• MACD Bearish the histogram is narrowing

• S1 US$ 10,302

• S2 US$ 8,045

• R1 US$ 14,035

• R2 US$ 17,991

Verdict – The weekly Capesize 5 TC index is once again entering back into

bullish territory. The weekly candlestick has not yet closed, however

based on the current market pricing we are once again back above the

cloud chart which should be regarded as bullish.

We also note the lagging line on the cloud chart (Marked as ‘Technically

Bullish’) is also crossing above the cloud and this is regarded as a

technically bullish entry signal. Providing we remain at these levels.

Supporting the bull technical is the stochastic which is now showing a

bullish cross from an oversold area.

Upside resistance can be found at US$ 14,035 and US$ 17,991, a close

above the first resistance would signal to fresh buyers to enter the

market targeting the second resistance.

Although the technical picture is bullish, market longs should be cautious

of a close below the US$ 10,302 as this would signal technical weakness

is entering the market and signal to sellers that the downside potential in

the near term would be back to pervious lows around the US$ 6,350

area.

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Technical Report Global Leader Dry Bulk Derivatives

‘Risk Disclosure: Trading derivative products such as swaps, futures and options carries with it a substantial risk of loss. Transactional fees such

as broker commission and clearing costs will be applied and these can vary depending on the type of product traded as well as the venue used

for execution. These products are not suitable for all investors. For any further information or to discuss the use of these products please speak

to your broker or relationship manager.’

Technical Analysis Glossary

Pivot Point

A point where the market makes a new high or low, before reversing in direction.

Trend Line

A directional line connecting pivot points.

Primary Trend

The main trend line over an extended period of time.

Secondary Trend

Distinct from but within the primary trend. Indicates recent trend.

Support

A previous market low where market participants have been prepared to enter long positions.

Resistance

A previous market high where market participants have been prepared enter short positions.

Range

An area between the support and resistance.

Relative Strength Index (RSI)

A technical momentum indicator that compares the magnitude of recent gains to recent losses in an attempt to determine

overbought and oversold conditions in an asset. The RSI ranges from 0 to 100.Typically speaking, an asset is deemed to be

overbought once the RSI approaches the 70 level, and likewise, as the RSI approaches 30, it is deemed to be oversold.

Fibonacci Retracement

Refers to areas of support or resistance. A Fibonacci retracement shows the potential retracement of a financial asset

relative to the original move in price. A trend line is drawn between two points and then the vertical distance is divided by

key Fibonacci ratios; 23.60%, 38.25%, 50.00%, 61.80% and 100.00%. This tool can also be used as a projection method.

Moving Average Convergence Divergence (MACD)

A trend-following momentum indicator that shows the relationship between two moving averages of prices. The MACD is

calculated by subtracting the 26-day exponential moving average (EMA) from the 12-day EMA. A nine-day EMA of the

MACD, called the "signal line", is then plotted on top of the MACD, functioning as a trigger for buy and sell signals on the

crossover of the two lines. The histogram highlights the narrowing and widening of the two averages acting as an indicator

for slowing or increasing momentum in the market. I.E a flattening or decreasing histogram in an upward market would

suggest that the upward move could soon stall.

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Technical Report Global Leader Dry Bulk Derivatives

‘Risk Disclosure: Trading derivative products such as swaps, futures and options carries with it a substantial risk of loss. Transactional fees such

as broker commission and clearing costs will be applied and these can vary depending on the type of product traded as well as the venue used

for execution. These products are not suitable for all investors. For any further information or to discuss the use of these products please speak

to your broker or relationship manager.’

Award winning broker

In 2015 FIS was named as the best performing inter-dealing broker in Iron Ore swaps and options by Singapore-based SGX

AsiaClear for the third consecutive year.

For More information on this report please contact:

Edward Hutton

Tel: +44(0)20 7090 1121

E-mail Edwardh@freightinvestor.com