Wednesday, September 28, 2011

Seven Month High in U.S. Dollar Muscles Crude Oil and Commodities Lower

We have been saying that the crude oil market is tied with the equity markets. As the equity markets go, so does crude oil. The November contract appears to be having some problems with an area of resistance at the $84.50 level.

With both our long term monthly and intermediate term Trade Triangles negative, we expect this market to have another push down to test the $80 level and possibly the $78 a barrel level. While this market is presently higher for the week, it is lower for the month and the quarter. Intermediate and Long term traders should continue to be short the crude oil market.

We are just two days short of the end of Q3 and the end of the month. How are these markets going to close for the quarter and for the week? Depending on which markets you are looking at, most markets are lower for the month, with the exception of the dollar index. The dollar index could possibly close at a seven month high on the monthly charts.

One thing is for certain, Europe is not the United States of America. In Europe there are too many areas of national pride for each individual country. I always believed this national trait would act as the Achilles’ heel in a euro zone economy. My view has not changed.

Can the banks be saved? We will let the markets answer that question for us.

November crude oil closed lower on Wednesday as it consolidates some of this week's rebound. The low range close sets the stage for a steady to lower opening on Thursday. Stochastics and the RSI are turning bullish hinting that a low might be in or is near. Closes above the 20 day moving average crossing at 86.39 would temper the near term bearish outlook.

If November extends this month's decline, August's low crossing at 76.61 is the next downside target. First resistance is the 10 day moving average crossing at 84.27. Second support is the 20 day moving average crossing at 86.39. First support is Monday's low crossing at 77.11. Second support is August's low crossing at 76.61.

Monthly Trade Triangles for Long Term Trends = Negative
Weekly Trade Triangles for Intermediate Term Trends = Negative
Daily Trade Triangles for Short Term Trends = Positive
Combined Strength of Trend Score = – 85

Trading 101...."How To Trade Market Sentiment"

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