Thursday, October 27, 2011

Crude Oil Settles at a New 3 Month High, Natural Gas and Gold Extend Rally

Crude oil closed higher on Thursday as it extending this month's rally. The high range close sets the stage for a steady to higher opening on Friday. Stochastics and the RSI are overbought but are neutral to bullish signaling that sideways to higher prices are possible near term. If December extends the rally off this month's low, the 50% retracement level of the May-October decline crossing at 95.32 is the next upside target. Closes below the 20 day moving average crossing at 85.56 are needed to confirm that a short term top has been posted. First resistance is the 50% retracement level of the May-October decline crossing at 95.32. Second resistance is the 62% retracement level of the May-October decline crossing at 100.08. First support is the 20 day moving average crossing at 89.06. Second support is the reaction low crossing at 83.40.

Natural gas was lower Thursday while extending this month's trading range. Stochastics and the RSI are diverging but neutral signaling that sideways trading is possible near term. Closes above last Monday's high crossing at 4.039 are needed to confirm that a short term low has been posted. If December renews this year's decline, monthly support crossing at 3.225 is the next downside target. First resistance is the 25% retracement level of the June-October decline crossing at 4.133. Second resistance is the 38% retracement level of the June-October decline crossing at 4.336. First support is today's low crossing at 3.724. Second support is monthly support crossing at 3.225.

Gold also closed higher on Thursday as it extends the rally off September's low. The high range close sets the stage for a steady to higher opening on Friday. Stochastics and the RSI are bullish signaling that additional strength is possible near term. If December extends the rally off September's low, the 62% retracement level of the 2008-2011 rally crossing at 1775.20 is the next upside target. Closes below last Thursday's low crossing at 1604.70 would confirm that a short term top has been posted. First resistance is the 62% retracement level of the 2008-2011 rally crossing at 1775.20. Second resistance is the 75% retracement level of the 2008-2011 rally crossing at 1826.50. First support is last Thursday's low crossing at 1604.70. Second support is September's low crossing at 1535.00.


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