Baltic Dry Index Turning Bullish?

The baltic dry index has been in a downtrend for six years with price falling from approximately 11500 all the way to just 500. However, price appears to have finally broken out of this downtrend – if it holds this would indicate a significant trend change to the bullish side.

On the chart above I have drawn the trendlines shows a declining bullish wedge (the dashed blue lines). This chart pattern typically results in a bullish upwards break and that is what has happened. We can see price found support at long term support around the 500 mark at which point in bounced in 2016. Moreover, price has also reclaimed the 200 day moving average, this further adds to the bullish case.

However, momentum indicators are showing price is tired and requires a rest. This is evidenced by the bearish crossover on the PMO (bottom of the chart). We will need to watch whether price manages to hold this breakout. Should it fail to hold and fall back below its long term trendline this would be a false breakout and a significantly bearish sign.

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