Friday, January 7, 2011

Crude Oil, Natural Gas and Gold Traders Respond to Labor Departments Employment Numbers

Crude oil did rebound overnight due to short covering after crude oil for February delivery settled at $88.38 a barrel, $1.92 lower than Wednesdays trading session. Big pressure was put on commodities as the U.S. dollar rose to a one month high against the euro on Thursday. But all markets were awaiting the U.S. Labor Department's monthly report that was expected to show that the unemployment rate dipped to 9.7 percent from 9.8 percent and that the economy created a net total of 145,000 jobs. But traders were disappointed as only 103,000 jobs were added bringing the unemployment rate down to 9.4%. The lowest unemployment rate in 19 months but not enough to give investors the confidence needed to rebound at Fridays opening.

While crude oil did consolidate some of Thursday's decline it remains below the 20 day moving average crossing at 89.84. Stochastics and the RSI remain bearish signaling that sideways to lower prices are possible near term. If February extends this week's decline, the reaction low crossing at 87.43 is the next downside target. Closes above the 10 day moving average crossing at 90.31 would temper the near term bearish outlook. First resistance is the 10 day moving average crossing at 90.31. Second resistance is Monday's high crossing at 92.58. First support is Thursday's low crossing at 87.85. Second support is the reaction low crossing at 87.43. Crude oil pivot point for Friday morning is 88.98.

Natural gas was lower overnight as it extends this week's decline. Stochastics and the RSI are turning bearish signaling that sideways to lower prices are possible near term. Closes below the 20 day moving average crossing at 4.325 would confirm that a short term top has been posted. If February renews the rally off December's low, the 50% retracement level of the June-October decline crossing at 4.876 is the next upside target. First resistance is Tuesday's high crossing at 4.707. Second resistance is the 50% retracement level of the June-October decline crossing at 4.876. First support is the 20 day moving average crossing at 4.317. Second support is December's low crossing at 3.985. Natural gas pivot point for Friday morning is 4.479.

Gold was sharply lower overnight and has broken out below support marked by December's low crossing at 1361.60. Stochastics and the RSI remain bearish signaling that sideways to lower prices are possible near term. If February extends this week's decline, the reaction low crossing at 1331.10 is the next downside target. Closes above the 10 day moving average crossing at 1393.40 would confirm that a short term low has been posted. First resistance is the 10 day moving average crossing at 1395.90. Second resistance is Monday's high crossing at 1424.40. First support is the overnight low crossing at 1356.50. Second support is the reaction low crossing at 1331.10. Gold pivot point for Friday morning is 1372.00.


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