BLUE LINE = BRLUSD
The market began at the highs and on a weak note as specs sold to commercials, resulting in a range of 16.15c and a net change of -9.35c. The market dropped to what I consider a predictable level strictly based on market behavior and current ranges. Of course, events can affect behavior. During the COT period weakness, prices found support. Whatever was liquidated in K was additionally purchased in N and in Delta. The days following the COT period consisted of strength that propelled prices to slightly above 230.00, resulting in a 17.30c spike from the lows of the week, but meeting resistance.
The market can break through 230.00 and keep going. Events at the moment are a strong Real, which means nothing fundamentally but may attract more speculative buying and possibly discourage origin selling, K option expiration which will mean resistance/support at strikes, the roll which can go either way for prices.
Spreads, I feel, are to some extent revealing. As the market rallied some spreads rallied and some not. KN stayed around Even. With option expiration for CSOs as well, this spread has disappointed the longs, just as HK did. But it also signifies that there isn’t a shortage issue for the immediate. NU was slightly steady but it too is showing weakness. There may or may not be a shortage but spreads are being bought simply based on anticipation of a shortage. I will continue to go with the flow but, together with the window dressing on the closes, the strength doesn’t yet seem justified.
As to the outright market, it continues to be a speculative driven bull market. It is very likely that commercials will be selling. We will see how much steam the market can pick up.