Wednesday, September 30, 2009

Oil Declines on Concerns U.S. Economy Struggling to Recover

Crude oil in New York fell after an unexpected drop in U.S. business activity and as companies cut more jobs than estimated, adding to concerns over the pace of revival in fuel demand in the biggest energy consuming nation.

Crude oil pared some of yesterday’s 5.9 percent gain after the Institute for Supply Management Chicago Inc.’s business barometer trailed economists’ estimates. Companies in the U.S. cut payrolls by a greater than forecast 254,000 jobs, a report from ADP Employer Services showed, indicating the labor market will be slow to recover.

“The poor economic news suggests oil should not go too much higher in price, because the U.S. economy is not improving as quickly as hoped,” Mike Sander, an investment adviser at Sander Capital in Seattle, said in an e-mail. “The economy is still in dire shape”.....read the entire article

Crude Oil Chart Damage Appears to be Repaired, For Now

Crude oil closed up $3.58 at $70.29 a barrel today. Prices closed nearer the session high today. The big gains today were supported by a bullish weekly storage report from the DOE, from a lower U.S. dollar and by the recent heightened tensions between the U.S. and Iran over its nuclear ambitions. Recent serious chart damage was mostly repaired today.

Natural gas closed down 3.8 cents at $4.837 today. Prices closed near mid range today. Prices are still in a three week old uptrend on the daily bar chart. Bulls still have upside technical momentum. The next upside price objective for the bulls is closing prices above solid technical resistance at the August high of $5.133.

The U.S. dollar index closed down 41 points at 76.94 today. Prices closed near mid range today. Bears still have the solid overall near term technical advantage. Bulls' next upside price objective is to close prices above solid technical resistance at 79.00.

Crude Oil Price Reacted Mildly Positive to Less Than Expected Distiallte Stock Gain


Crude oil inventory rose +2.8 mmb, compared with consensus of +2 mmb increase, to 338.4 mmb in the week ended September 29. The good thing is Cushing stock recorded significant drop of -1.5 mmb. Situation in oil product stockpiles was better than previously anticipated. Gasoline inventory drew -1.66 mmb while distillate inventory gained only +0.32 mmb. Both readings beat market expectations.

WTI crude oil price changes little after the report, only edging slightly higher to 67.5 from 66.5 before the release. Investors probably need to gauge the implications of a higher crude build with lower distillate build. Heating oil bounces to 1.71 while RBOB gasoline rises to 1.65 after the report. Lack of positive response from investors was also driven by disappointing US employment data and Chicago PMI. ADP reported -254K decline in employment in September following a -277K drop in the prior month. The market had expected.....Read the entire article

Bloomberg Analysis: Oil’s Sideways Trend Points to $70 Breakout

Crude oil has a greater chance of rising above $70 a barrel the longer it stays in the sideways pattern that has characterized trading in the past two months, according to National Australia Bank Ltd. Oil has been locked in a band of $65 to $75 a barrel since the start of August as traders weighed optimism over the prospects for a recovery in global demand against a supply glut. As the market has held its floor, prices will soon rise, said Gordon Manning, a Sydney based analyst, citing technical charts.

“The longer we’re in a sideways pattern, when we do break out, potentially the more powerful it’s going to be,” Manning said in an interview. “I wouldn’t be surprised to see that sort of ‘kick’ from around these current levels back up to about $70. There’s more of a risk of a $3 rally than a $3 fall from here”.....Read the entire article

Do You Understand How Divergences Work in the Market?


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Crude Oil Rises as Growth in China, Japan Buoys Demand Outlook

Crude oil rose above $67 a barrel in New York as manufacturing expanded in China and Japan, buoying hopes for a rebound in fuel demand.

Oil is nonetheless heading for its first quarterly decline this year amid swelling fuel inventories in the U.S. The Energy Department will probably report that supplies of crude and fuel increased last week, according to a Bloomberg survey. Chinese manufacturing rose for a sixth month in September and Japanese industrial output climbed for a sixth time in August.

“Emerging markets have definitely been driving the demand recovery,” said Thina Saltvedt, an analyst at Nordea Bank AB in Oslo. “Industrial production has increased. We will see a gradual improvement in the economy, but prices have got ahead of the physical fundamentals”.....Read the entire article

Hype hype, hype hype Iran

Oil prices got a bid from a rising stock market and concerns over Iran. Now, while some traders and analysts try to hype the Iran story, the truth is the odds of an imminent military conflict with Iran are being greatly exaggerated. And if we do actually get into a conflict, it is unclear as to whether or not it will have a long term impact on oil prices in a world awash in supply.

Many analysts point to the fact that the Iranians have threatened to close the Straits of Hormuz, a major choke point for global supply. The Straits are located between Oman and Iran and connects the Persian Gulf with the Gulf of Oman and the Arabian Sea. According to the Department of Energy, Hormuz is the world's most important oil choke point due to its daily oil flow.....Read the entire article

Tuesday, September 29, 2009

Saudi Aramco CEO: Sluggish Demand in West Not Offset by China

Oil demand remains "sluggish" throughout the developed world, and growth in China isn't making up for the loss, said Saudi Aramco CEO Khalid Al Falih. "It will take time to make up for the millions of barrels of lost demand that we have experienced," said Al Falih, the head of Saudi Arabia's state oil company, in an interview to air Monday evening on the Nightly Business Report on PBS. "But ultimately, it will come."

Saudi Arabia, the world's biggest oil exporter, is seeing its efforts pay off to hold down production within the Organization of Petroleum Exporting Countries. While supplies are higher than normal worldwide, prices are holding steady around $70 a barrel, roughly where Al Falih said it is necessary to encourage investment in new production. Al Falih was interviewed .....Read the entire article

Oil Drops as Dollar Rises, Analysts Forecast Supply Increase

Crude oil dropped as a stronger dollar reduced the appeal of commodities as an alternative investment and analysts forecast fuel supplies will climb. Oil futures have almost doubled since February as the dollar declined 17 percent and rising equity markets buoyed investor confidence. U.S. oil and fuel inventories probably increased last week amid refinery maintenance and a sluggish economic recovery.

“The dollar continues to be a leading indicator for oil prices because of the global nature of the asset,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. Crude oil for November delivery declined 13 cents to settle at $66.71 a barrel at 2:44 p.m. on the New York Mercantile Exchange. Oil prices have increased 50 percent this year. Futures fell 8.4 percent last week, the biggest drop since the week ended July 10.....Read the entire article

Crude Oil Daily Technical Outlook From ONG Focus


Break of 67.02 minor resistance indicates that an intraday low is in place at 65.05 and some consolidation could now be see. Nevertheless, recovery is expected to be limited well below 71.11 resistance an bring fall resumption. Below 65.05 will target 61.8% projection of 75.0 to 67.05 from 73.16 at 60.30 next, which is close to next psychological level of 60.

In the bigger picture, sustained trading below medium term trend line support solidifies that case that medium term rebound from 33.2, which is treated as correction whole down trend form 147.27, has completed at 75.0 on bearish divergence conditions in daily MACD and RSI. Further break of 58.32 cluster support (38.2% retracement of 33.2 to 75.0 at 59.03) will confirm this case and pave the way for a retest of 33.2 low. On the upside, break of 71.77 resistance is needed to invalidate this view. Otherwise, outlook will remain bearish.....Here is the charts!

Crude Drops on Forecast U.S. Oil, Fuel Supplies Rose Last Week

Oil fell before a report forecast to show that U.S. supplies of crude and refined oils accumulated because of a sluggish economic recovery. An Energy Department report due tomorrow will probably show crude stockpiles rose by 1 million barrels last week, according to the median estimate of nine analysts surveyed by Bloomberg News. Gasoline and distillate fuel inventories also increased, the survey said.

Oil prices have gained 50 percent this year as a weaker dollar boosts the appeal of crude as a currency hedge. “With energy fundamentals still uninspiring, prices should remain confined to the $65-$75 trading range for some time to come,” said Edward Meir, an analyst with MF Global Ltd. in Darien, Connecticut. “The dollar’s decline seems to have stalled” and.....Read the entire article

Monday, September 28, 2009

Bottom Pickers Push Crude Oil Higher, Natural Gas Pulls Back

Crude oil closed up $0.89 at $66.91 a barrel today. Prices closed nearer the session high today on short covering and speculative bottom picking. Prices Friday hit a fresh nine week low. Serious near term chart damage has been inflicted recently as prices have seen a bearish downside "breakout" from a trading range at higher price levels.

Natural gas closed down 11.6 cents at $4.832 today. Prices closed nearer the session low today on profit taking. Prices Friday hit a fresh six week high. Prices are in a three week old uptrend on the daily bar chart. Bulls have upside technical momentum.

The U.S. dollar index closed up 21 points at 77.23 today. Prices closed nearer the session high today on more short covering in a bear market. Bears still have the overall near term technical advantage.

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BP, Kuwait to Build Refinery in China

Energy giant BP (BP) is collaborating with Kuwait to build a $9 billion refinery venture in southern China. The facility, in China's Guangdong province, would have a refining capacity of 300,000 barrels per day.

The facility would be 30 percent owned by KPI, Kuwait's state run oil company. Chinese refiner Sinopec (SHI) would have a 50 percent stake, while Dow Chemical (DOW) and Shell (RDS.A) (RDS.B) would each take a ten percent stake. Work on the refinery is expected to commence by March of 2010.



Natural Gas Feint Means Prices Poised to Plummet 19%

The steepest rally in natural gas prices since 2006 is coming to an end as the 400 salt caverns, depleted oil fields and aquifers used to store the fuel in the U.S. reach capacity for the first time. Stockpiles may surpass the record of 3.545 trillion cubic feet by as much as 350 billion cubic feet this fall, Energy Department estimates show. Gulf South Pipeline Co. says its fields in Louisiana and Mississippi are so full that customers will have to pay penalties for exceeding their limits. With no place to go, producers will be forced to dump excess fuel on the market.

The worst economic slump since the 1930s will cut demand from chemical plants to carmakers to households by 2.4 percent this year, according to government estimates. The November futures contract will drop about 19 percent to near $4 per million British thermal units, said Stephen Schork, president of consultant Schork Group Inc. in Villanova, Pennsylvania.....Read the entire article

USO, UNG, SPY Trading Charts From The Gold and Oil Guy

The market continues to whipsaw traders out of positions as volatility rises. I have put together a few charts to show you where USO and UNG are trading along with the SPX (SP500 index).

USO Crude Oil Trading Fund
Crude oil started to bleed lower last week as the price sliced through the multi month support trend line. Volume shot up as stop orders get triggered on the way down. We finally have a move outside of the pennant formation that has been in place for several months. Now we can start looking for a low risk setup for trading crude oil again.


UNG Natural Gas Trading Fund
Natural gas has really come back to life. I mentioned on September 2nd that natural gas (UNG) looked like a buy between $9 – $9.50 and it has now rallied 25% since that point. But stepping back and looking at the chart we can see resistance is hovering over head between the $12 – $12.25.

I may send out a setup for a short play if we get one but I feel the heavy sell off in August was the final wave down, flushing out traders. Speculative traders seem to have moved into natural gas and I think they will continue to buy it for some time. Pullbacks will be sharp but most likely followed with more buying as we enter the cooler months of the year.


SPX Index Trading

I thought that I would show a quick picture of the SPX because it shows the psychology of traders and how it repeats it’s self over and over. The black and green waves are virtually the same patterns.

I feel as though the market is ready for a larger pullback than what we had in June/July but my focus will be to buy in the oversold dips and lighten my positions in overbought conditions (scaling in and out of positions) until the trend confirms it has reversed.


My Market Trading Conclusion:
Gold stocks are pulling back and precious metals continue to move with the overall market action. I do feel that gold and silver will break this relationship and start to move higher in the coming months but until that happens I remain cautious with my positions tightening my stops.

Crude oil is starting to come alive and I am now looking for some low risk setups for energy related funds. Last week’s technical breakdown could provide us with a big move in the coming months.

Natural Gas continues to hold up but is now trading near resistance. Depending how many spec traders there are still lingering around (as most lost their shirts in the recent months), will dictate how much higher natural gas will move. The 25-30% rally in the past month has been very powerful and this could be just the beginning. I am now waiting for another setup that could be a long or a short trade depending on what happens next.

If you would like to get Chris Vermeulen's Bi-Weekly Trading Reports via email please visit The Gold and Oil Guy

New Video: Straight Lines Lead Straight to Profits in Crude Oil

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Sunday, September 27, 2009

New Video: Gold, It’s All Falling Into Place

You may have watched our earlier video on the gold cycles and how important they are in this particular market, at this particular time. Today’s action is indicative of the cycle that we were talking about in the video as it’s pushing gold prices down into a cyclic time window.

I wanted to follow up with this new short video to show you where we believe there should be some good levels to get into a long gold position. The energy fields we’ve discussed before in gold and other markets are still very much intact and are getting wound up for the big move we’ll see later this year.

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U.S. Gas Fund May Shrink With CFTC Rules

U.S. Natural Gas Fund, the largest exchange traded fund in the fuel, may be forced to shrink if U.S. regulators tighten limits on energy speculation, said John Hyland, the fund’s chief investment officer. The Commodity Futures Trading Commission may cap energy investments amid concern speculators contributed to record high commodity prices last year. New limits may force the fund to reduce shares, Hyland said in a Bloomberg television interview.

“The problem there is the shareholders are in UNG because they want the natural gas exposure,” Hyland said. The $4 billion fund is an “easy target” for politicians who need a “villain” to blame for high energy prices, he said. Interest in the fund boomed this year. Shares outstanding grew 11 fold since the start of the year to 347.4 million, pushing the ETF’s natural gas holdings to a July peak equal to 20 percent of all the gas consumed in the U.S. last year..... Read the entire article

New Video: The Dollar Makes a Major Low in Q4.......of 2011!

The dollar will hit a major low in Q4 of 2011. Watch this short video and see how we came up with this bold forecast.

The move is already underway and the lows are in place, however, it is not too late to get into this market and take advantage of what we believe will be a major move to the upside for the euro.

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Oil Rises for Second Day on Recovery Outlook, Iran Tensions

Crude oil rose for a second day on speculation the global economy’s gradual recovery will increase demand for fuel and energy. A Conference Board report tomorrow in the U.S., the world’s largest oil user, may show consumer confidence is at its highest in a year, according to economists surveyed by Bloomberg News. Prices also rose after Iran, the world’s fourth largest oil producer, conducted missile tests days before meeting with western officials over a previously secret nuclear facility.

Crude oil for November delivery gained as much as 47 cents, or 0.7 percent, to $66.49 a barrel in after hours electronic trading on the New York Mercantile Exchange. It was at $66.39 at 8:09 a.m. in Sydney. The contract rose 13 cents to $66.02 on Sept. 25, trimming its loss for the week to 8.9 percent. Prices climbed from $65.05, an eight week low, after U.S. President Barack Obama said a new nuclear plant Iran is building shows the Islamist nation is.....Read the entire article

Crude Oil Closes Higher, Still Bearish Signals Point to Lower Prices

Crude oil closed higher due to short covering on Friday as it consolidated some of Thursday's decline. Stochastics and the RSI are bearish signaling that sideways to lower prices are possible near term.

The mid range close sets the stage for a steady to higher opening on Monday. If November extends this week's breakout below trading range support crossing at 67.66, July's low crossing at 61.38 is the next downside target.

First resistance is the 20 day moving average crossing at 70.27
Second resistance is last Thursday's high crossing at 73.16

First support is today's low crossing at 65.05
Second support is July's low crossing at 61.38

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Natural gas closed higher on Friday as it extends this month's rally. The high range close sets the stage for a steady to higher opening on Monday. Stochastics and the RSI are overbought but remain bullish signaling that sideways to higher prices are possible near term.

If October extends this month's rally, the 38% retracement level of this year's decline crossing at 4.082 is the next upside target. Closes below the 20 day moving average crossing at 3.260 would temper the near term friendly outlook in the market.

First resistance is today's high crossing at 4.04
Second resistance the 38% retracement level at 4.08

First support is the 10 day moving average crossing at 3.66
Second support is the 20 day moving average crossing at 3.26

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The December Dollar closed lower due to profit taking on Friday but remains above the 10 day moving average crossing at 76.71. The mid range close sets the stage for a steady opening on Monday. Stochastics and the RSI are turning bullish hinting that a short term low might be in or is near.

Closes above the 20 day moving average crossing at 77.40 are needed to confirm that a short term low has been posted. If December extends this month's decline, monthly support crossing at 75.73 is the next downside target.

First resistance is Monday's high crossing at 77.33
Second resistance is the 20 day moving average crossing at 77.40

First support is Wednesday's low crossing at 76.22
Second resistance is monthly support crossing at 75.73

Thursday, September 24, 2009

Serious Near Term Chart Damage Inflicted on Crude Oil


Crude oil closed down $3.05 at $65.92 a barrel today. Prices closed near the session low again today and hit a fresh nine week low. Serious near term chart damage was inflicted today as prices saw a big and bearish downside "breakout" from the recent trading range at higher price levels. Crude bears now have the near term technical advantage.

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Natural gas closed up 14.0 cents at $4.894 today. Prices closed nearer the session high again today and hit a fresh six week high. Prices are in a two week old uptrend on the daily bar chart. Bulls gained upside technical momentum today, but have more work to do to suggest prices can continue to trend higher.

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The U.S. dollar index closed up 80 points at 77.09 today. Prices closed near the session high today on a short covering in a bear market. Bears still have the solid overall near term technical advantage. Bulls' next upside price objective is to close prices above solid technical resistance at 78.00.

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Natural Gas Advances in New York on Signs of Rebound in Demand


Natural gas futures rose in New York for the third straight day amid speculation that a strengthening economy and colder U.S. weather will increase demand and begin to draw down near record high inventories. A government report today showed an unexpected drop in U.S. jobless claims, a sign the economy is pulling out of the recession. Demand for gas starts to rise in November as temperatures fall.

“The question is how hard are we going to hit storage?” said Teri Viswanath, director of commodities research at Credit Suisse Securities USA in Houston. The market has priced in record high storage and is now focused on the prospect that a cold U.S. winter will lead to inventory draw downs, she said. Natural gas for October delivery rose 9.5 cents, or 2.5 percent, to close at $3.955 per million Btu on the New York Mercantile Exchange. The fuel was trading at $3.774 before the supply report was released at 10:30 a.m. in Washington.....Read the entire article

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Oil Falls to a 1-Month Low on Larger Than Expected Supply Gains


Crude oil fell to a one month low after a government report of a larger than forecast gain in U.S. fuel supplies signaled that a glut is forming in the world’s biggest energy consuming country. U.S. gasoline stockpiles surged 5.41 million barrels last week, more than 10 times what was forecast by analysts in a Bloomberg News survey. Inventories of distillate fuel, a category that includes heating oil and diesel, rose 2.96 million barrels, almost double what was estimated. Crude oil supplies also climbed in the week ended Sept. 18.

“We had three major stock builds and increases in the year on year surplus,” said Peter Beutel, president of trading adviser Cameron Hanover Inc. in New Canaan, Connecticut. “We are testing support and will have to see if we can break out of the recent range”.....Read the entire article

Crude Oil Prices Weaker Going Into Thursday Trading


Crude oil prices are weaker early today and trading has turned choppy. In November crude, look for buy stops to reside just above resistance at $69.00 and then just above resistance at $70.00. Look for sell stops just below technical support at $68.00 and then more sell stops just below support at the September low of $67.66. Today's key near term Fibonacci support/resistance level: $69.90. Wyckoff's Intra-Day Market Rating: 4.5 Thursday's pivot point for crude oil is 69.39

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The U.S. dollar index is slightly higher in early trading today. Bears still have the solid overall near-term technical advantage. Slow stochastics for the dollar index are neutral early today. The dollar index finds shorter-term technical resistance at the overnight high of 76.63 and then at 76.95. Shorter-term support is seen at the contract low of 76.04 and then at 75.75. Today's key near-term Fibonacci support/resistance level: 76.89. Wyckoff's Intra Day Market Rating: 5.0

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December S&P 500: The shorter term moving averages (4, 9 and 18 day) are still bullish early today. The 4 day moving average is above the 9 day and 18 day. The 9 day is above the 18 day moving average. Short term oscillators (RSI, slow stochastics) are neutral to bearish early today.

Today, shorter term technical support comes in at this week's low of 1,051.80 and then at 1,040.00. Sell stops likely reside just under those levels. Upside resistance for active traders today is located at last week's and last week's high of 1,070.50 and then at Wednesday's high of 1,075.50. Buy stops are likely located just above those levels. Wyckoff's Intra- day Market Rating: 5.0 Today's key near term Fibonacci support/resistance level: 1,056.00.

Pivot:--------------- 1,063.30
1st Support:-------- 1,051.10
2nd Support:-------- 1,043.30
1st Resistance:----- 1,071.10
2nd Resistance:----- 1,083.30

Crude Oil Falls a Second Day on Gains in U.S. Fuel Stockpiles


Crude oil declined for a second day after a U.S. government report showed a larger than expected increase in fuel stockpiles in the world’s largest energy consuming nation. Gasoline stockpiles in the U.S. surged 5.4 million barrels last week, the Energy Department said yesterday. That’s more than the 500,000 barrel increase forecast in a Bloomberg News survey of analysts. Diesel and heating oil inventories jumped almost 3 million barrels, double what was expected, and crude oil stockpiles also climbed.

“If products aren’t moving, then there’s no demand for crude,” Sentje Diek, an energy analyst at HSH Nordbank AG, said by phone from Hamburg. “Gasoline and distillate stockpiles are clearly above their five year average.” Crude oil for November delivery fell as much as 95 cents, or 1.4 percent, to $68.02 a barrel in electronic trading on the New York Mercantile Exchange. It was at $68.49 at 11:11 a.m. London time. Coupled with a 3.9 percent plunge yesterday, the two day decline has reduced oil’s year to date gain to 54 percent, from more than 60 percent last week.....Read the entire article

Wednesday, September 23, 2009

Following the Jockeys in the Oil Patch


You’re only as good as your last deal.

Buy the jockey, not the horse.

That’s what came to mind today when I read that Eagle Rock Explorations (ERX-TSXv) was bringing in a new management and re-capitalizing this 550 boe producer operating in Alberta and Saskatchewan. Half the new group is from Crescent Point Energy (CPG-TSX) the most highly valued intermediate oil producer on the TSX. That’s a great calling card. The other half comes from Wild River and Prairie Schooner, two junior producers that were build and sold earlier this decade.

And the Eagle Rock stock showed the worth of this team, quadrupling to 32 cents on huge volume of 12 million shares – 22% of the stock outstanding. Many investors follow this strategy, find successful management teams who have built and sold companies before, and follow them on every deal. So in my next issue for subscribers, due out in the first couple weeks of October, I will profile three new young companies that are the new ventures for three highly successful management teams in the Canadian oil patch.....Read the entire article

Where is Crude Oil Headed on Thursday?

CNBC's Sharon Epperson discusses the day's activity in the commodities markets, and looks ahead to where oil is likely headed tomorrow.




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Crude Oil Bulls Fail to Defend $69 Level


Crude oil closed down $3.21 at $68.55 a barrel today. Prices closed near the session low today. Trading has turned choppy in crude. Bulls faded badly today. Crude bulls still have the slight near term technical advantage. The next downside price objective for the crude oil bears is to produce a close below solid technical support at the September low of $67.66.

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Natural gas closed up 20.1 cents at $4.721 today. Prices closed nearer the session high again today. Prices are still in a two week old uptrend on the daily bar chart. However, bulls have more work to do to suggest prices can continue to trend higher.

Today’s Stock Market Club Trading Triangles

The U.S. dollar index closed up 24 points at 76.59 today. Prices closed near the session high today on a late rally after hitting another fresh contract low early on. Short covering in a bear market was featured. Bears still have the solid overall near term technical advantage. There are still no early technical clues that a market low is close at hand for the index.

Phil Flynn: Go Ahead and Make my Day


Go ahead and make my day. Commodity prices explode in what really shouldn’t be called trading, it should be called tainting. One day after paying all “due respect” to the Federal Reserve the dollar tanked and the commodities rallied almost trash talking the Federal Reserve and daring them to do something about it. I know what you’re thinking, did the Fed cut rates 4 times or was it five? In fact in all the excitement I kind of forgot myself.

I guess the question is: does the Fed feel lucky? Well do ya punk? The commodity markets are confident that the Fed is powerless at this point and does not have the courage to challenge the dollar. Everyone knows that the Fed can’t raise rates and the Fed will keep the target range for the federal funds rate at 0 to 1/4. The fact is the market does not believe the Fed has the courage to even hint at an exit strategy. Go ahead, keep printing money.....Read the entire article

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Crude Oil Drops Below $69 After Unexpected U.S. Supply Gain


Crude oil fell below $69 a barrel in New York after a U.S. Energy Department report showed an unexpected increase in stockpiles as refineries idled units for seasonal maintenance and fuel demand dropped. Inventories climbed 2.86 million barrels to 335.6 million last week, the report showed. A decline of 1.4 million barrels was forecast, according to the median of 17 analyst responses in a Bloomberg News survey. Supplies of gasoline and distillate fuel, a category that includes heating oil and diesel, rose more than estimated.

“These numbers are bearish across the board,” said Bill O’Grady, chief market strategist at Confluence Investment Management in St. Louis. “We’ve been in a $60 to $75 range since early July. Prices should go down and test the bottom end of the range after these numbers.” Crude oil for November delivery fell $2.59, or 3.6 percent, to $68.96 a barrel at 10:49 a.m. on the New York Mercantile Exchange. Futures touched $68.57, the lowest since Sept. 15.....Read the entire article

Crude Oil Trading Choppy Ahead of FOMC Statement

Crude oil prices are near steady early today. Trading has turned choppy. In November crude, look for buy stops to reside just above resistance at $72.00 and then just above resistance at Monday's high of $72.65. Look for sell stops just below technical support at $71.00 and then more sell stops just below support at $70.00. Pivot point for crude oil today is 71.18. Today's key near term Fibonacci support/resistance level: $70.65. Wyckoff's Intra Day Market Rating: 5.0

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The December U.S. dollar index is slightly lower in early trading today, and hit yet another fresh contract low overnight. Bears still have the solid overall near term technical advantage. Slow stochastics for the dollar index are neutral early today. The dollar index finds shorter term technical resistance at 76.50 and then at Tuesday's high of 76.95. Shorter term support is seen at the overnight contract low of 76.11 and then at 76.00. Today's key near term Fibonacci support/resistance level: 77.32. Wyckoff's Intra Day Market Rating: 4.0

Can you learn to trade crude oil in just 90 seconds?

December S&P 500: The shorter term moving averages (4, 9 and 18 day) are bullish early today. The 4 day moving average is above the 9 day and 18 day. The 9 day is above the 18 day moving average. Short term oscillators (RSI, slow stochastics) are neutral to bullish early today. Today, shorter term technical support comes in at the overnight low of 1,064.00 and then at Tuesday's low of 1,059.50. Sell stops likely reside just under those levels. Upside resistance for active traders today is located at last week's and the overnight high of 1,070.50 and then at 1,080.00. Buy stops are likely located just above those levels. Wyckoff's Intra day Market Rating: 5.5 Today's key near term Fibonacci support/resistance level: 1,039.00.

Pivot point--------- 1,065.35
1st Support:-------- 1,061.50
2nd Support:-------- 1,055.65
1st Resistance:----- 1,071.20
2nd Resistance:----- 1,075.05

Tuesday, September 22, 2009

Oil Falls After Industry Report Shows Increase in Fuel Supplies


Crude oil fell in New York after an industry report showed an increase in fuel supplies in the U.S., adding to signs demand has yet to recover in the world’s largest energy consumer.Oil pared yesterday’s 2.6 percent gain after a report from the industry funded American Petroleum Institute showed U.S. gasoline stockpiles climbed the most since January. The Energy Department report today is expected to show increases in the nation’s fuel inventories, according to a Bloomberg News survey.


“We’ve been expecting a demand recovery but we still haven’t seen much of a justification in the supply demand fundamentals,” said Toby Hassall, a research analyst with CWA Global Markets Pty in Sydney. “The underlying supply-demand profile still suggests the market could be vulnerable to a pullback”.....Read the entire article

Finding the Right Oil Plays Is Easier than You Think


It's a mistake that too many people make. I'm not immune, by any means. In fact, one of the first trades I ever made proved to be an important lesson. The mistake was simple. Several years ago, I was star struck by a big name in natural gas and thought buying this company would prove a win win deal for me. A few months later, I swallowed my pride and ended up taking the big loss.

Believe me, it's a mistake I won't make again, and the good (if any) that comes from a loss is that the bad deals end up being the ones we learn from. So what has me thinking about a painful trade from the past? A reader of mine recently shared what he called, in his words, a 'hugely successful trading story.' At first, I was elated. . . I'm always in the mood to hear a good story from one of my readers. Yet the moment he told me the name of the company.....Read the entire article

The Chinese Oil Demand Teaser


One day China’s oil demand is bad and the next, good. Welcome to another mystery from The Middle Kingdom. Yesterday oil prices were pressured on reports of bulging inventories in China and weak demand. Platts reported that Chinese oil demand in August slid 5.4% from July. Platts said that China's implied oil demand totaled 33.02 million metric tons in August versus 34.92 million metric tons in July. Oil refiners in China are reporting that demand is still weak. Reuter’s news reported that Chinese oil company Sinopec had sales of refined oil products still lower than one year ago. Reuters says that despite a moderate inventory draw in August, China's diesel inventories had been building up faster than gasoline had in past months, reflecting the slower consumption for the main transportation fuel used by Chinese industry and trucks.....Read the entire article

New Video: The Reason Why Gold Hasn’t Skyrocketed


With the printing presses in full printing mode, many people are questioning why gold prices haven’t gone higher....much higher.

In our new video, we explain some of the subtle market cycles that are at play right now in this market. These short term cycles have been the dominant force in gold all year and appear to be still in control of price action.

We believe the longer term upward trend in gold is very much intact, short term we could see more of a trading range that has a downward bias. We think when you watch this video you will get a much better understanding about the rhythm of this market.

If we are correct, you will see some amazing opportunities that we believe will be presented to traders in Q4. In fact, if everything goes according to plan we could all be looking at some very nice Christmas/holiday profits.

The video is easy to follow and I think you’ll learn a whole lot about cyclic price action in the gold market.

Just Click Here to watch the video, and of course it's Free with our compliments and you are not required to register to view this video.

Enjoy the video and please leave a comment to let us know what you think about the video and the direction of gold.

Crude Oil Rises for First Time in Four Days as Dollar Weakens


Crude oil rose for the first time in four days as the dollar declined, bolstering the appeal of commodities as a hedge against inflation. Oil climbed as much as 2.9 percent as the U.S. currency slipped to $1.4821 per euro, its weakest level since Sept. 23, 2008. Net crude oil imports by China, Asia’s biggest energy consuming country, increased 18 percent to 17.92 million metric tons in August, the second highest level on record.

“More than anything else, we are seeing a reaction to the incredible weakness of the dollar,” said Addison Armstrong, director of market research at Tradition Energy in Stamford, Connecticut. “Yesterday, the dollar strengthened and oil fell more than $2. Now the dollar’s plunged to the lowest level against the euro in a year and look what’s happened”.....Read the entire article

Monday, September 21, 2009

Oil Options Hit Highs as Verleger Predicts 44% Plunge


Oil traders are paying more than ever in the options market to protect against a plunge in crude prices. The gap between prices of options betting on a decline and those that would profit from a rise in oil widened to a record 10 percentage points, according to five years of data compiled by Bank of America Securities Merrill Lynch. Crude stockpiles in the U.S. are 14 percent larger than a year ago and OPEC is pumping 600,000 barrels a day more than the world needs, according to the International Energy Agency.

While the recovery from the first global recession since World War II pushed oil up 62 percent this year to $72.04 a barrel in New York, growth alone isn’t likely to erode the glut by the end of next year because production exceeds demand, data from the Paris based IEA shows. A drop in prices would penalize companies from Exxon Mobil Corp. to BP Plc and exporters.....Read entire article

Market Report: Oil Prices Set to Decline Amid Global Econ Matters


As the dollar world turns. Oil prices are heading lower ahead of a big week in global economic matters. Not only will the G-20 meet in Pittsburgh to try to assess what went wrong with the global economy and try to fix it, but also the Fed meets to decide whether or not it's time to remove some of the props that have been lifting the global markets. And the question for oil traders is whether or not the dollar can find love and happiness in a world gone mad.

Once again the dollar is the key driver moving the crude market. Traders are covering the dollar on fear that perhaps the G-20 may do something to support the dollar or that the Fed may slow down its purchases of treasuries. Of course the dollar has been oversold and it's possible that we are getting to the point where the carry trade has gotten.....Read the entire article

New Video: Two Major Technical Forces Are About to Collide in the S&P 500


The S&P 500 has seen remarkable recovery from the lows that were seen earlier this year. However, all of that may come to an end as we fast approach a strategic level for this market. There are two major technical indicators that are colliding at a crucial point and time. Unless you’re aware of these indicators, it could be very expensive.

In today’s short video, I explain both the technical indicators we are discussing and also the important time frame that we are just about to enter.

I think you will find today’s video not only interesting, but also educational.

There is no need to register for this video and of course you can watch it with my compliments. I highly recommend watching this video today, otherwise you risk missing out on what could be the move of the year.

Just Click Here to enjoy the video and please feel free to leave a comment and let our readers know what you think!

Bloomberg Technical Analysis: N.Y. Natural Gas Set to Decline Below $3

Natural gas futures, which jumped 28 percent last week, may revisit seven year lows after surging into an “overbought” area of resistance between $3.58 and $3.87 per million British thermal units, according to a technical analysis by Barclays Capital. Gas tumbled 82 percent from a high of $13.694 per million Btu in July 2008 to touch $2.409 on Sept. 4. Gas then surged 57 percent through Sept. 18. The futures have entered a resistance zone and the downtrend is likely to resume, MacNeil Curry, a New York based analyst at Barclays, said in an interview. “We’re around the high end of this resistance zone and things are overbought,” Curry said. “This is still an environment where bounces should be sold.....Read the entire article

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Sunday, September 20, 2009

Weekly Summary From Crude Oil Trading Small Spec.


From Guest analyst Rich Olney.....

Weekly Summary for Sunday 9/20/09
Nov Crude Oil finished the week up 4% or 2.77 points to close at 72.49. Nat Gas finished the week up 21.6% closing at 3.778. The SnP cash closed the week up 2.5% closing at 1068.30. The USD lingers around support at 76 closing the week at 76.67. Gold finished the week up 4 points or up 1/2% at 1009.40. This week we get the FED MTG on Wed.

The commercials increased their net short position on crude this last week. It increased from -133,519 to -143,033 which is the second highest net short position this year. The high is 145,499 this year so we are at a yearly extreme. The Nat Gas net long position is at 40,512 which is the highest it has been since the commercials went net long last May.

For inventories crude oil imports have been decreasing and inputs into refineries have been increasing which means lower crude oil inventories. However Gasoline and Heating oil inventories are increasing. For Nat Gas current inventories are at 3458 and there are about 7 -10 more injections left before nat gas winter demand ramps up. If Nat Gas injections were to match last year then that would mean an additional 524 bcf of injections. Here are the balance of last years injections:

9/18 +54 bcf
9/25 +82 bcf
10/2 +87 bcf
10/9 +81 bcf
10/16 +71 bcf
10/23 +49 bcf
10/30 +23 bcf
11/6 +54 bcf
11/13 +23 bcf
11/20 -55 bcf

For technicals on crude support lies at 68. There is resistance at 73 which has held back crude for two weeks. If crude closes above 73 then it can make a run at the highs at 75.89 where there is strong resistance. For Natty it needs to close above the down trend line and above the rally high at 3.90. If natty can close above 3.90 two session in a row then that should confirm higher prices are in the cards. However Natty to close above the trend line first.....Read the entire post with charts!

Just Click Here to sign up for a Crude Oil Trading Small Specs Membership

“As California goes, so goes the nation”....Let’s hope not!


From guest blogger Adam Hewison....

There’s a saying that most of us have heard many times before, “As California goes, so goes the nation.” The saying is/was intended to recognize Californians for consistently being on the cutting edge of new developments in science, business and innovation.

Let’s hope that the current dire unemployment picture in California doesn’t end up sweeping the rest of the nation.

—————-

This graphic courtesy of the Los Angeles Times, Full article here.

Crude's Rally Derailed from Fundamentals Again


Strength in stock markets and decline in USD were the major reasons for the rises in commodities. In the US, Dow Jones Industrial Average climbed +2.2% to settle at 9820 while S&P 500 Index surged +2.6% to 1068.3 as driven by better-than-expected housing market (housing starts), employment situation (jobless claims) and improvements in manufacturing activities (Empire State and Philly Fed Index). The dollar weakened further with every rebound being treated an opportunity to sell as investors' risk appetite increases. In the coming week, the FOMC meeting will be market's focus. While the Fed will likely announce to keep its policy rate at 0-0.25% for an extended period of time, it may talk more about plans for exiting from the current stimulus policies.

Crude Oil
Crude oil price retreated to -0.6% to settle 72.04 Friday, the second consecutive day of fall as USD recovered after substantially weakened against major currencies in the past week. On weekly basis, the October contract reached 73.16 the highest and gained +4%. Recent rally in crude oil has been determined by movements in USD and stock markets, rather than fundamentals....Read the entire article

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Friday, September 18, 2009

What are you waiting for....Here is 10 FREE Trading Lessons!


What a great way to start the weekend, we are giving you 10 FREE trading lessons from the MarketClub.

MarketClub Trade School is your own personal trading university where you set the curriculum with some of the most well known professional traders in the world.

MarketClub puts all of your research tools in one easy to use package that together gives you the edge you need to build and manage your investments.

So just Click Here to get started with your 10 FREE lessons and be ready to put them to work right away!

Crude Oil Fluctuates Amid Equity Gain, Ample U.S. Supplies


Crude oil fluctuated as equity gains indicated that the U.S. is pulling out of a recession amid ample fuel supplies in the world’s biggest energy using country. Oil is heading for a 4.6 percent increase this week, a second straight weekly advance, as the stock market climbed on data showing an expansion in U.S. housing starts and industrial capacity utilization.

The country’s supplies of crude oil, gasoline and distillate fuel are higher than average, according to the Energy Department. “This is a range bound market,” said Tom Bentz, a senior energy analyst at BNP Paribas Commodity Futures Inc. in New York. “There’s nothing at this moment that is giving it a direction”.....Read the entire article

Crude Oil Declines for a Second Day on Stronger U.S. Dollar


Crude oil fell for a second day as the dollar strengthened against the euro, dimming investors’ demand for dollar priced assets to hedge against inflation. Oil dropped as much as 1.7 percent as the U.S. currency climbed for the first time in five days. Inventories of crude oil, gasoline and distillate fuel are higher than average, according to the Energy Department.

“The rally in energy is looking a little long in the tooth,” said John Kilduff, senior vice president of energy at MF Global in New York. “There isn’t any economic data to give the market any strength. The dollar is a bit stronger today, which is weighing on things”.....Read the entire story

The Buy and Hold Myth.....Is Buy and Hold Back?


We have been thinking about one of the oldest myths about trading, "the buy and hold myth". Everyone has heard the buy and hold logic....but how about the other side of the argument? While this strategy has worked in certain markets at certain times, we do not believe we are in a time frame where this strategy is going to meet with a lot of success.

The world around us is changing rapidly and therefore it is important to have strategies that can change with this new regime.

In today’s video we are going to show you how the buy and hold strategy is flawed when you compare it to our “Trade Triangle” technology. I think you will be surprised at the results and how well you can do using this simple approach to markets.

There is no need to register for this video and of course you can watch it with our compliments. I highly recommend watching this video today, otherwise you risk missing out on what could be the move of the year.

Just Click Here to enjoy the video and please leave a comment to tell us what you think of the video and the buy and hold myth.

Thursday, September 17, 2009

UNG - Still in a Downtrend, or Has the Tide Turned?

With all of the controversy UNG has been through this summer, more then ever we have to rely on technical analysis and trend indicators. We rely solely on Smart Scan Chart Analysis for the current trend and Smart Scan is still showing some near term weakness in UNG. However, UNG is now in a longer term uptrend and should be traded with tight money management stops.

Based on a pre-defined weighted trend formula for chart analysis, UNG scored +70 on a scale from -100 (strong downtrend) to +100 (strong uptrend):

+10......Last Hour Close Above 5 Hour Moving Average
+15......New 3 Day High on Wednesday
+20......Last Price Above 20 Day Moving Average
+25......New 3 Week High, Week Ending September 19th
-30......New 3 Month Low in September
+70......Total Score



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New Video: How to Invest in Energy

Dan Dicker expert trader reveals the best oil stocks to own and how to diversify your energy portfolio.

Crude Consolidates Just Below our Previous 3rd Tier Downtrend Line


Crude futures are hanging just below our previous 3rd tier downtrend line after posting a solid recovery from our 1st tier uptrend line. Crude futures picked themselves up after Friday's sell off on large volume following broad based depreciation of the Dollar coupled with the S&P breaking through 1050. Investors returned to risk in the aftermath of better than expected global economic data. The most positive catalyst for crude futures was the impressive showing in Core Retail Sales on Tuesday. Improvement in consumption helps raise the outlook for present and future demand for commodities such as crude. As for the supply side, the U.S. reported another large inventory shortage for the third time in the past four weeks. The dramatic drop in supply combined.....Read the entire article

How To Find Winning Trades In Any Market

Is There Something Wrong with the Crude Oil Market?


With the official end to summer, the Labor Day weekend, behind us and the nation's largest energy company investor conference underway, the oil market received several shot in the arm positives last week. Wall Street talking heads had a difficult time understanding what was going on with the price of gold and crude oil futures soaring on the first trading day following last Monday's holiday. Gold futures traded over $1,000 an ounce and crude oil prices jumped by $3 a barrel. The inability of the talking heads to explain the phenomenon left us wondering if we were seeing a global investor reaction to Washington politicians returning to work. Those of us living in Texas have a reaction when our legislature goes into session in Austin. We hold onto our wallets during those few months of the legislative session every two years since that is our peak exposure to politicians inflicting serious financial damage on our wellbeing.....Read the entire article

Gas Fund’s Roll ‘Slaughtered’ Speculators, Boosted Volatility


Speculators trying to profit from the U.S. Natural Gas Fund’s roll of futures contracts got “slaughtered” and helped boost volatility as gas prices surged this week, said Adam Felesky, chief executive officer of BetaPro Management Inc.

Gas for October delivery rose 27 percent, through yesterday, on the New York Mercantile Exchange as traders had to cover their bets that the gas fund’s sale of the front month contract would reduce the price, said Felesky. Volatility jumped to the highest level since Amaranth Advisors LLC collapsed in September 2006.

Speculators shorted October gas, anticipating that the $4 billion gas fund would push prices down when it began selling its October contracts on Sept. 14, said Felesky, whose C$1 billion ($937.1 million) Horizons BetaPro Nymex Natural Gas Bull Plus ETF rolled around the same time as the larger fund.....Read the entire story

Oil Price Remains Firm As Strong Stock Market Offers Support


Strong trading momentum in crude oil persists and the benchmark contract rises further to 72.7 in European morning. Investors remain thrilled by the huge draw in crude inventory despite weak fuel demand. Advance in equity markets and weakness in USD also support prices. Stock markets in Europe open higher Thursday. UK's FTSE 100 Index climbs +1% tpo 5172 although the country's retail sales stayed flat in August from a month ago. The market had expected a +0.1% gain. On annual basis, the gauge rose +2.1% while July's sales were revised down to +2.9%. Both of DAX (Germany) and CAC 40 (France) gain +0.6% in morning session.

Stocks in Asia performed very well with the MSCI Asia Pacific Index rising +1.2%, In Japan, the Nikkei 225 Stock Average surged +1.7% to 10444 as the Bank of Japan upgraded its economic outlook on the nation. The BOJ stated that Japan' economy has shown 'signs of recovery', compared with the 'stopped worsening' comment made in the previous month. However, the central bank remained concerned about the downside risk to growth and hence maintained the policy rate at 0.1%.....Read the entire article with charts!

Wednesday, September 16, 2009

Oil Trades Near $72 After Supplies Drop to Lowest Since January


Oil traded near $72 a barrel in New York after the U.S. Energy Department reported that crude stockpiles in the biggest energy consuming nation dropped to the lowest level since January. Crude inventories fell 4.73 million barrels, the weekly report showed yesterday, more than the 2.5 million barrel decline forecast in a Bloomberg News analyst survey.

Prices also gained as the dollar declined to the weakest level in almost a year and as global equities advanced, spurring expectations of improving fuel demand.“The gains in equities support optimism for the economic recovery that would drive oil demand and lead to supply tightness,” said Victor Shum, a senior principal at consultants Purvin & Gertz Inc. in Singapore.....Read the entire article

New Video: Crude Oil Rises After EIA Report



New Video: USD$ Dollar Index UPDATE


The last time we made a video of this index was a little over two months ago. In that video our Trade Triangle technology predicted that we would see further weakness in the Dollar Index.

Guess what? This market has weakened substantially since our last video on July 14. We also pointed this out in a blog post on September 3rd.

Our Trade Triangle technology has really been on top of this market and captured every major move since inception. MarketClub’s “Trade Triangles” remain steadfastly bearish and there appears to be no lasting turnaround in the Dollar Index as of this writing.

In this short video, we want to show you exactly how the Trade Triangles can benefit your own trading. The process is very simple, very direct, and yes, very profitable. Nothing is guaranteed in trading, but you will certainly put the odds in your corner using our Trade Triangle technology.

Just Click Here to watch the video!

There is no need to register for this video and of course you can watch it with our compliments. I highly recommend watching this video today otherwise you risk missing out on what could be the move of the year.

Please feel free to leave a comment and let us know what you think.

Is Resolution of Natural Gas Conundrum About to Emerge?


For most of this year, natural gas prices have moved counter to almost everyone's expectations falling while crude oil prices have risen dramatically. The conventional explanation has been that natural gas production coming from the newly completed wells in the prolific gas shale formations around the country is much greater than from traditionally located and drilled wells. The unanswered questions are when will this phenomenon of more productive wells coming on stream end and why are producers continuing to drill ANY gas wells in a sub $3 per thousand cubic feet (Mcf) world?

Why are producers continuing to drill ANY gas wells in a sub-$3 per thousand cubic feet (Mcf) world?

Some producers have claimed that they have been scaling back their gas drilling activity lately, despite the recent uptick in gas drilling rigs, but the backlog of drilled but yet to be completed wells is being worked down and that accounts for many of the prolific new wells coming on stream. The answer to why producers are willing to drill and complete wells in today's low gas price world is answered by the strong contango that has prices for natural gas one year into the future selling at nearly $2 per Mcf higher than current fiscal spot prices. The two charts below.....Read the entire article with charts!

Technical Analysis for Energy Markets


The key support level for the ascending channel remained intact in front of the crude oil's constant attempts to decline, to push the price to the upside and halt at correction level 67.8% for the last downside wave, seen in the image above. It appears that a constant slant is towards the upside; thus, continuing the general upside within the main ascending channel (shown in the secondary image), while taking into consideration that achieving this upside requires some key terms; first one being the breach of level 71.15 (correction 67.8%), the second is breaching the minor resistance level 72.40 (resisting the minor descending channel, which could force the price in declining once again), and the third being the most.....Read the entire article with charts

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