Wednesday, January 26, 2011

India Interest Rates, UK and Spain News Weighing on Crude Oil Bulls

I know we are guilty from time to time of making it sound like it's all about China. But let's not forget Chinas partner in massive growth, India. And this week it looks like the U.S. consumer seems to be getting a bit of help from a rate increase in India that is weighing on the commodity bulls. And India's central bank warns that inflation risks will remain a problem for some time.

And from across the pond contributed to the pull back with worse than expected GDP data out of the United Kingdom and renewed worries popping up in Spain's bond market. A plan supported by their finance minster does not seem to be convincing investors that Spain can get a handle on their financial woes. All of this appears to be weighing investors and crude oil and commodity prices.

And this just supports our continued predictions for a mid January pull back. And if you look at recent years the facts support our theory. In seven of the past 10 years imports expanded during January. And the street agreed on Tuesday taking March oil futures down $1.68 to $86.19 a barrel, the lowest settlement price since Nov. 30.

But the long oil crowd seems to be holding it's ground as many commercial traders are feeling that it will take a downside break in crude oil of 80.06 support to be the first sign of medium term reversal and break of 64.23 to confirm it. Otherwise a good majority of these traders outlook will remain bullish. This same "bull camp" see a further rise could still be in the cards all the way to the 61.8% retracement at 103.70 and possibly above.

But we are trading today and it appears crude oil is still rolling over. Here is your pivot, support and resistance numbers for Wednesday morning......

Crude oil was higher due to short covering overnight as it consolidates some of this month's decline. Stochastics and the RSI are oversold but remain bearish signaling that sideways to lower prices are possible near term. If March extends this month's decline, the 38% retracement level of the May-January rally crossing at 85.51 is the next downside target. Closes above the 20 day moving average crossing at 90.61 are needed to confirm that a short term low has been posted. First resistance is the 20 day moving average crossing at 90.61. Second resistance is this year's high crossing at 93.46. First support is Tuesday's low crossing at 86.12. Second support is the 38% retracement level of the May-January rally crossing at 85.51. Crude oil pivot point for Wednesday morning is 86.72.

Natural gas was lower overnight as it extends the decline off Monday's high and is trading below the 20 day moving average crossing at 4.494. Stochastics and the RSI have turned bearish signaling that sideways to lower prices are possible near term. Closes below the 20 day moving average crossing at 4.494 are needed to confirm that a short term top has been posted. If March renews the rally off October's low, the 62% retracement level of the June-October decline crossing at 5.025 is the next upside target. First resistance is Monday's high crossing at 4.823. Second resistance is the 62% retracement level of the June-October decline crossing at 5.025. First support is the 20 day moving average crossing at 4.494. Second support is the reaction low crossing at 4.302. Natural gas pivot point for Wednesday morning is 4.494.

Gold was higher due to short covering overnight as it consolidates some of this month's decline. Stochastics and the RSI are oversold but remain neutral to bearish signaling that sideways to lower prices are possible. If February extends this month's decline, the 25% retracement level of the 2009-2010 rally crossing at 1296.40 is the next downside target. Closes above the 20 day moving average crossing at 1376.10 are needed to confirm that a short term low has been posted. First resistance is the 10 day moving average crossing at 1358.70. Second resistance is the 20 day moving average crossing at 1376.10. First support is Tuesday's low crossing at 1323.50. Second support is the 25% retracement level of the 2009-2010 rally crossing at 1296.40. Gold pivot point for Wednesday morning is 1330.70.


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