Wednesday, June 23, 2010

Sharp Drop in New Home Sales Pushes Oil, Gold and U.S. Dollar Lower

Crude oil closed lower on Wednesday due to slow oil sales and a sharp decline in new home sales. Today's close below the 10 day moving average crossing at 77.40 signaling that a short term top is in or is near. The mid-range close sets the stage for a steady opening on Thursday. Stochastics and the RSI are overbought and are turning bearish signaling that sideways to lower prices are possible near term. Closes below the 20 day moving average crossing at 75.79 would confirm that a short term top has been posted. If August renews the rally off May's low, the 62% retracement level of last month's decline crossing at 81.13 is the next upside target. First resistance is Monday's high crossing at 78.92. Second resistance is the 62% retracement level of last month's decline crossing at 81.13. First support is the 20 day moving average crossing at 75.79. Second support is today's low crossing at 75.17.

Natural gas closed higher due to short covering on Wednesday as it consolidated some of this week's decline but remains below the 10 day moving average crossing at 4.917. The low range close sets the stage for a steady to lower opening on Thursday. Stochastics and the RSI are bearish signaling that additional weakness is possible near term. Closes below the 20 day moving average crossing at 4.694 would confirm that a short term top has been posted. If July renews the rally off May's low, the 62% retracement level of the November-May decline crossing at 5.429 is the next upside target. First resistance is last Wednesday's high crossing at 5.196. Second resistance is the 62% retracement level of the November-May decline crossing at 5.429. First support is the 20 day moving average crossing at 4.691. Second support is today's low crossing at 4.691.

The U.S. Dollar closed lower on Wednesday ending a two day correction off Monday's low. The low range close sets the stage for a steady to lower opening on Thursday. However, stochastics and the RSI are oversold and are turning bullish hinting that a short term low might be in or is near. Closes above the 20 day moving average crossing at 87.16 would confirm that a short term low has been posted. If September renews this month's decline, the 38% retracement level of the November-June rally crossing at 83.83 is the next downside target. First resistance is today's high crossing at 86.71. Second resistance is the 20 day moving average crossing at 87.16. First support is Monday's low crossing at 85.36. Second support is the 38% retracement level of the November-June rally crossing at 83.83.

Gold closed lower on Wednesday following the release of today's bearish new home sales data. The mid-range close sets the stage for a steady opening on Thursday. Stochastics and the RSI are 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 1230.10 are needed to confirm that a short term top has been posted. If August renews this year's rally into uncharted territory, upside targets will now be hard to project. First resistance is Monday's high crossing at 1266.50. First support is the 20 day moving average crossing at 1230.10. Second support is today's low crossing at 1225.20.

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