Thursday, May 17, 2012

Crude Oil Falls Below 50% Retracement Level, Gold Bounces on Short Covering

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Crude oil closed lower on Thursday extending this week's breakout below the 50% retracement level of the 2011-2012 rally crossing at 93.99. The low range close sets the stage for a steady to lower opening on Friday.

Stochastics and the RSI are oversold but remain bearish signaling that sideways to lower prices are possible near term. If June extends this month's decline, the 62% retracement level of the 2011-2012 rally crossing at 89.90 is the next downside target. Closes above the 20 day moving average crossing at 100.02 are needed to confirm that a low has been posted.

First resistance is the 10 day moving average crossing at 95.75. Second resistance is the 20 day moving average crossing at 100.02. First support is Wednesday's low crossing at 91.81. Second support is the 62% retracement level of the 2011-2012 rally crossing at 89.90.

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Natural gas closed lower due to light profit taking on Thursday. The mid range close sets the stage for a steady opening on Friday. Stochastics and the RSI are overbought but remain neutral to bullish signaling that sideways to higher prices are possible near term.

If June extends the rally off last week's low, the 25% retracement level of the 2011-2012 decline crossing at 2.757 is the next upside target. Closes below the 20 day moving average crossing at 2.327 would signal that a short term top has been posted.

First resistance is today's high crossing at 2.676. Second resistance is the 25% retracement level of the 2011-2012 decline crossing at 2.757. First support is the 10 day moving average crossing at 2.464. Second support is the 20 day moving average crossing at 2.327.

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Gold closed higher due to short covering on Thursday as it consolidates some of this month's decline. The high range close sets the stage for a steady to higher opening on Friday.

Stochastics and the RSI are oversold but remain neutral to bearish signaling sideways to lower prices are possible near term. If June extends the decline off February's high, the 38% retracement level of the 2008-2011 rally crossing at 1487.50 is the next downside target. Closes above the 20 day moving average crossing at 1619.60 are needed to confirm that a short term low has been posted.

First resistance is the 10 day moving average crossing at 1589.00. Second resistance is the 20 day moving average crossing at 1619.60. First support is Wednesday's low crossing at 1526.70. Second support is the 38% retracement level of the 2008-2011 rally crossing at 1487.50.

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