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Monday, May 14, 2007

US TECHS: Commodities Outlook; Gold and Oil

Last week's break in [gold] broke uptrends from early January but not longer trends dating back to last October. Prices are above both those trendlines today, found in the $664-70 band on June futures. Outside week structure down last week with a close on the lower end of range is a moderate concern for bulls. Daily trends turned bearish on Friday, and a new Trend Intensity signal was set the day before.

However, the above-noted uptrends are overlapped by weekly envelope floors around $667, so supports have by no means irretrievably broken down. Bulls are best served if the market can get back past 50-day moving averages and key monthly levels in the $674-75 band and stay above. Daily momentum is just crossing into negative territory today; should this prove to be a short-lived move, weekly resistance in the $682-88 zone will be tested this week.

In [oil], only modest gains are needed to neutralize the bearish Trend Intensity signal set last week. Simply put, the failure to break below mid-March floors in the low $60 zone helped stem selling pressures, and now the $63.60-64.00 band has become important, marking significant daily and weekly resistance.

Daily trend models turn bullish today above $61.90 while weekly models can turn bearish (at week's end) below $63.60. Lots of moving average resistance is also found in the upper $63 handle, so that's the area to watch to see if bulls can retake the market's reins.

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