Wednesday, December 22, 2010

Who Will Win The Battle, The U.S. Dollar or Crude Oil?

It's true, oil demand has improved slightly. But crude oil has still over shot it's real value going into this Santa Claus rally and something has to give. History tells us that the dollar and the currency exchanges will win out. We are still bearish the U.S. Dollar for the long term as Washington shows no sign of easing the printing presses. But the near term weakness in the Euro gives dollar bulls the upper hand against commodities, especially oil.

So despite the TV talking heads wild dreams of $100 oil in the near future we just don't see that until summer of 2011....if even then! But we don't trade this market as if we were pshyic, we trade the numbers given us each and every day. And here are those numbers for Wednesday morning......

Crude oil was higher overnight while extending this month's trading range. Stochastics and the RSI are turning bullish signaling that sideways to higher prices are possible near term. If February renews the rally off November's low, May's high crossing at 93.87 is the next upside target. Closes below the 20 day moving average crossing at 88.17 are needed to confirm that a short term top has been posted. First resistance is the reaction high crossing at 91.17. Second resistance is May's high crossing at 93.87. First support is the 20 day moving average crossing at 88.17. Second support is last Wednesday's low crossing at 87.43. Crude oil pivot point for Wednesday morning is 89.66.

Natural gas was lower overnight as it extends Tuesday's decline. Stochastics and the RSI are oversold and are turning bullish hinting that a low might be in or is near. Closes above the 20 day moving average crossing at 4.290 are needed to confirm that a short term low has been posted. If January extends this month's decline, November's low crossing at 3.853 is the next downside target. First resistance is the 20 day moving average crossing at 4.290. Second resistance is this month's high crossing at 4.637. First support is last Friday's low crossing at 3.951. Second support is November's low crossing at 3.853. Natural gas pivot point for Wednesday morning is 4.120.

Gold was slightly higher due to short covering overnight as it consolidates some of last week's decline. Stochastics and the RSI are turning bullish signaling that sideways to higher prices are possible near term. Closes above the 20 day moving average crossing at 1388.20 would confirm that a short term top has been posted. If March renews this month's decline, the reaction low crossing at 1352.00 is the next downside target. First resistance is the 20 day moving average crossing at 1388.20. Second resistance is the reaction high crossing at 1408.90. First support is last Thursday's low crossing at 1361.60. Second support is the reaction low crossing at 1352.00. Gold pivot point for Wednesday morning is 1387.70.


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