Monday, May 17, 2010

Crude Oil Signals Remain Oversold, Lower Prices Still Likely

Crude oil closed lower on Monday and spiked below last September's low crossing at 69.40. A short covering bounce tempered early losses and the mid range close sets the stage for a steady opening on Tuesday. Stochastics and the RSI are oversold but remain neutral to bearish signaling that sideways to lower prices are possible near term. If June extends this month's decline, last July's low crossing at 65.66 is the next downside target. Closes above the 20 day moving average crossing at 80.19 are needed to confirm that a short term low has been posted. First resistance is the 10 day moving average crossing at 76.01. Second resistance is the 20 day moving average crossing at 80.19. First support is today's low crossing at 69.27. Second support is last July's low crossing at 65.66.

Natural gas closed higher on Monday as it extended last week's rally. The high range close sets the stage for a steady to higher opening on Tuesday. Stochastics and the RSI remain bullish signaling that sideways to higher prices are possible near term. If June extends today's rally, the 25% retracement level of the October-April decline crossing at 4.438 is the next upside target. Closes below the 20 day moving average crossing at 4.157 would temper the near term friendly outlook. First resistance is last Thursday's high crossing at 4.414. Second resistance is the 25% retracement level of the October-April decline crossing at 4.438. First support is the 10 day moving average crossing at 4.158. Second support is the 20 day moving average crossing at 4.157.

The U.S. Dollar closed higher on Monday as it extends this year's rally. However, profit taking tempered much of today's gains and the low range close sets the stage for a steady to lower opening on Tuesday. Stochastics and the RSI are overbought but remain bullish signaling that sideways to higher prices are possible near term. If June extends this year's rally, the 87% retracement level of 2009's decline on the weekly continuation chart crossing at 87.79 is the next upside target. Closes below the 20 day moving average crossing at 83.39 are needed to confirm that a short term top has been posted. First resistance is today's high crossing at 87.21. Second resistance is weekly resistance crossing at 87.79. First support is the 10 day moving average crossing at 84.92. Second support is the 20 day moving average crossing at 83.39.

Gold closed lower due to profit taking on Monday as it consolidated some of the rally off February's low. The low range close sets the stage for a steady to lower opening on Tuesday. Stochastics and the RSI are overbought, diverging and are turning bearish hinting that a short term top might be in or is near. Closes below the 20 day moving average crossing at 1185.10 would confirm that a short term top has been posted. If June extends this year's rally into uncharted territory, upside targets are hard to project. First resistance is last Friday's high crossing at 1249.70. First support is the 10 day moving average crossing at 1209.60. Second support is the 20 day moving average crossing at 1185.10.

The "Super Cycle" in Gold and How It Will Affect Your Pocketbook in 2010

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