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Inflation Or Deflation? Depends On What Commodity Index Does Next

By Chris KimbleMarket OverviewJan 27, 2022 02:08PM ET

www.investing.com/analysis/inflation-or-deflation-depends-on-what-commodity-index-does-next-200616211

Inflation Or Deflation? Depends On What Commodity Index Does Next

By Chris Kimble | Jan 27, 2022 02:08PM ET

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Commodities were already in a slump when coronavirus hit in 2020. That crash sent commodities to the lowest levels in decades.

A quick economic rebound led to a return of demand, leading to shortages in 2021 and into 2022.

So now what?

Well, if you look at today’s long-term weekly chart of the CRB Commodity Index, you can see that the past two years produced the largest 90-week rally in nearly 50 years!

This has taken commodities from the bottom of the falling channel (marked by each 1) to the top of the channel.

CRB Weekly Chart

What's Next? Deflation Or Hyperinflation?

The rally has commodities testing important dual resistance at (2). This resistance is a combination of lateral resistance from past peaks along with the falling overhead channel.

A breakout would put inflation concerns front and center. However, a sharp turn lower may produce the biggest bust of inflation in history. Keep an eye on what happens at (2). Stay tuned.

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Comments (4)

MuraliKrishna Brahmandam Jan 27, 2022 10:36PM ET

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Growflation will happen

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Stan Smith Jan 27, 2022 9:34PM ET

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Neither...Stagflation is coming

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Savvas Orphanides Jan 27, 2022 5:17PM ET

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Excellent analysis. Simple and to the point. Isn't the Fed looking into inflation from the wrong angle?

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Manoj Krishnan Jan 27, 2022 5:17PM ET

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ya the fed is basing it's policy bollinger band technical analysis...

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CarlJohan Nilsson Jan 27, 2022 4:34PM ET

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Interesting 👍

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