Commodity Markets Setting Up For Powerful Multi-Week Uptrend (Technical Analysis)

There is a big opportunity shaping up in the commodity space on the long side, which, I believe, will catch many by surprise.

Several commodity markets are building large bases, which span months in duration. As the saying goes, “the larger the base, the more powerful the subsequent breakout”.

The fact that a number of commodity sub-sectors are setting up at the same time is likely to add to the strength and durability of the breakout.

I believe this has the makings of a multi-month rally in various commodity markets, that will likely kick-start within the next 2-3 weeks.

The sub-sectors I am focused on are energy (uranium, natural gas, solar), precious metals, and rare earths.

Uranium miners (URA) broke out of a massive 6-year base in 2021. They then consolidated for 2 years, before breaking out in December 2023. They have been consolidating for 4 months, and look likely to break out higher again.

Monthly Chart: URA

Natural gas (UNG) (BOIL) (NG1:COM) prices recently broke out from a 3-month base on the daily chart. Natural gas has been in a bear market for months, as we may observe from the longer-term weekly chart below. It looks like this market may be bottoming out.

Daily Chart: Natural Gas

Weekly Chart: Natural Gas

Solar stocks (TAN) have been building a large wedge pattern, and saw what looks like a false breakdown from it in April. Prices have since recovered, and are shooting out from the wedge pattern from the opposite direction.

Daily Chart: TAN

Weekly Chart: TAN

Looking at the longer-term monthly chart of TAN, prices are retesting the neckline of the 9-year base it broke out higher from back in 2020. This could be a textbook retest of the breakout zone, and is a high-probability area to stage a rebound.

Monthly Chart: TAN

In precious metals, I have been a bull for the bulk of this year, but prices in gold (GLD) (XAUUSD:CUR) are just too extended now to get excited over. They will likely need to correct in either time or price before setting up a buy opportunity again.

Monthly Chart: XAUUSD

Silver (SLV) (XAGUSD:CUR) looks attractive from a technical perspective, though. It has been building a big base since July 2021, and looks to be gathering energy for an assault on $30 again. Break that key pivot and it is blue skies ahead.

Monthly Chart: XAGUSD

Rare earths (REMX) are also putting in the same bottoming pattern as the TAN ETF on the daily time frame. It is similarly in a multi-month bear market, and looks to be bottoming at the same time.

Daily Chart: REMX

When looking at the REMX/SPY ratio, we can see that REMX is also poised to break out from a multi-week base against the SPY on a relative basis.

Daily Chart: REMX/SPY

All in all, I think the technical charts in various commodity markets are lining up at the same time for a breakout.

If they do break out in tandem, then this confluence of strength can lead to a very explosive and durable breakout and uptrend in the commodity space.

I am long FSLR from the solar space, SGML from the rare earths space, natural gas, and silver. If there are more constructive developments in this space, I will provide an update.