The November contract closed lower for the seventh time in nine sessions on Aug. 9, ending down $15/metric ton at $775.90/mt for its second-largest loss realized during this period.
The Aug. 4 high tagged nearby resistance at $800/mt, while sentiment has clearly shifted since. As seen on the second study of the attached chart, the Nov/Jan futures spread closed at minus $4.90/mt, its weakest daily close since July 4 and a signal of a growing bearish sentiment hanging over the market.
Current trade is seen as sideways overall, with today's trading range consolidating within the previous session's range, while so far this week, trade has consolidated within last week's range (not shown).
Trade continues to hold above the contract's 200-day moving average at $769.20/mt, which has acted as support for the past month, along with last week's $771/mt low. Trade also continues to hold above the 38.2% retracement of the move from the contract's May 31 low to July 19 high, calculated at $761.70/mt. A breach of this level could lead to a further slide to the 50% retracement at $733/mt, which is only $0.50/mt below the July 4/5 low.
Over the past three weeks, noncommercial traders have held a modest bearish net-long futures position, with this position reported at 15,795 contracts net-long as of Aug. 1, a third consecutive bullish position held. This group could easily move back to bearish territory when the CFTC reports for Aug. 8 on Friday of this week.
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