Thursday, August 26, 2010

Weak U.S. Dollar Gives Crude Oil Bulls Much Needed Momentum

The S&P 500 index closed lower on Thursday as it consolidates some of Thursday's rally. The low range close sets the stage for a steady to lower opening on Friday. Stochastics and the RSI are oversold but remain neutral to bearish signaling that additional weakness is possible near term. If September extends this month's decline, July's low crossing at 1003.10 is the next downside target. Closes above the 20 day moving average crossing at 1090.13 are needed to confirm that a short term low has been posted. First resistance is the 10 day moving average crossing at 1068.71. Second resistance is the 20 day moving average crossing at 1090.13. First support is Wednesday's low crossing at 1037.50. Second support is July's low crossing at 1003.10.

Crude oil closed higher due to short covering on Thursday despite record high US oil stockpiles. The mid-range close sets the stage for a steady to higher opening on Friday. Stochastics and the RSI are oversold and are turning neutral to bullish hinting that a short term low might be in or is near. Closes above the 20 day moving average crossing at 77.53 are needed to confirm that a short term low has been posted. If October extends this month's decline, May's low crossing at 70.35 is the next downside target. First resistance is the 10 day moving average crossing at 74.27. Second resistance is the 20 day moving average crossing at 77.53. First support is Wednesday's low crossing at 70.76. Second support is May's low crossing at 70.35.

Natural gas closed lower on Thursday as it extends this month's decline. The low range close sets the stage for a steady to lower opening on Friday. Stochastics and the RSI are oversold but remain neutral to bearish signaling that sideways to lower prices are possible near term. If October extends this month's decline, weekly support crossing at 3.810 is the next downside target. Closes above the 20 day moving average crossing at 4.343 would confirm that a short term low has been posted. First resistance is the 10 day moving average crossing at 4.138. Second resistance is the 20 day moving average crossing at 4.343. First support is Today's low crossing at 3.825. Second support is weekly support crossing at 3.810.

The U.S. Dollar closed lower due to profit taking on Thursday as it consolidates some of this month's rally. The low range close sets the stage for a steady to lower opening on Friday. Stochastics and the RSI are overbought but remain neutral to bullish signaling that sideways to higher prices are possible near term. If September extends this month's rally, the reaction high crossing at 84.73 is the next upside target. Closes below the 20 day moving average crossing at 82.07 would temper the near term friendly outlook. First resistance is Tuesday's high crossing at 83.64. Second resistance is the reaction high crossing at 84.73. First support is the 20 day moving average crossing at 82.07. Second support is the reaction low crossing at 81.99.

Gold closed lower due to a decline in jobless data on Thursday as it consolidates around the 75% retracement level of the June-July decline crossing at 1239.60. Stochastics and the RSI are overbought, diverging but are turning bullish signaling that sideways to higher prices are possible near term. If August extends the rally off July's low, the 87% retracement level of the June-July decline crossing at 1253.30 is the next upside target. Closes below the 20 day moving average crossing at 1212.80 would temper the friendly outlook. First resistance is today's high crossing at 1244.50. Second resistance is the 87% retracement level of the June-July decline crossing at 1253.30. First support is the 10 day moving average crossing at 1229.70. Second support is the 20 day moving average crossing at 1212.80.

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