ONG: Crude Oil Weekly Technical Outlook For Sunday August 12th

As always we like to check in with the great staff at Oil N'Gold for their call on where crude oil is headed this week.....

Crude oil resumed the rally from 77.28 by taking out 92.94 and reached as high as 94.72 before making a temporary top there. Initial bias is neutral this week for some consolidations. But we'll stay bullish as long as 86.92 support holds. As noted before, decline from 110.55 should have finished at 77.28 already. Current rebound from there should extend and above 94.72 will target 61.8% retracement of 110.55 to 77.28 at 97.84 and above.

In the bigger picture, price actions from 114.84 are viewed as a three wave consolidation pattern with fall from 110.55 as the third leg. Such decline could have finished earlier than we expected at 77.28. Sustained trading above 90 psychological level will bring stronger rally towards 114.83 resistance level. And break there will resumption whole up trend from 33.2. On the downside, another fall cannot be ruled out yet. But even in that case, strong support should be seen below 74.95 and above 61.8% retracement of 33.20 to 114.83 at 64.38 and bring another medium term rise.

In the long term picture, crude oil is in a long term consolidation pattern from 147.27, with first wave completed at 33.2. The corrective structure of the rise from 33.2 indicates that it's second wave of the consolidation pattern. While it could make another high above 114.83, we'd anticipate strong resistance ahead of 147.24 to bring reversal for the third leg of the consolidation pattern.

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Crude Oil Weekly Technical Outlook For Saturday June 9th

From the staff at Oil N'Gold......

Crude oil turned into sideway consolidation after edging lower to 81.21 initially. Recovery was limited by 4 hours 55 EMA but there was no follow through selling. Initial bias is neutral this week and we'd likely see more consolidative trading ahead. Above 87.03 will bring another rise but upside should be limited by 92.21 resistance and bring fall resumption eventually. Below 81.21 will send crude oil through 80 psychological level to test on 74.95 key support.

In the bigger picture, price actions from 114.84 are developing into a three wave consolidation pattern. And, the third leg should have already started at 110.55. Deeper fall should eventually be seen to 74.95 low and possibly below. Though, we'd likely see strong support from 64.23 cluster level, 61.8% retracement of 33.20 to 114.83 at 64.38 and bring another medium term rise. Hence we'll look for reversal signal below 74.95.

In the long term picture, crude oil is in a long term consolidation pattern from 147.27, with first wave completed at 33.2. The corrective structure of the rise from 33.2 indicates that it's second wave of the consolidation pattern. While it could make another high above 114.83, we'd anticipate strong resistance ahead of 147.24 to bring reversal for the third leg of the consolidation pattern.

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ONG: Crude Oil Weekly Technical Outlook For Saturday March 10th

Crude oil dipped to 104.35 last week but drew support form 38.2% retracement of 95.44 to 110.55 at 104.78 and recovered. However, the recovery was weak so far and looks corrective. The development suggest that another decline would be seen as correction from 110.55 extends. Below 104.35 will target 61.8% retracement at 101.21. On the upside, break of 110.55 will confirm rally resumption for 114.83 key resistance. But before that, more consolidative trading would be seen first.

In the bigger picture, the medium term up trend from 33.2 shouldn't be completed yet. Rise from 74.95 is indeed tentatively treated as resumption of such rally. Sustained break of 114.83 will target 61.8% projection of 33.2 to 114.83 from 74.95 at 125.40. On the downside, though, break of 95.44 support will indicate that correction pattern from 114.83 is going to extend further with another falling leg to 74.95 and below before completion.

In the long term picture, crude oil is in a long term consolidation pattern from 147.27, with first wave completed at 33.2. The corrective structure of the rise from 33.2 indicates that it's second wave of the consolidation pattern. While it could make another high above 114.83, we'd anticipate strong resistance ahead of 147.24 to bring reversal for the third leg of the consolidation pattern.

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ONG: Crude Oil Weekly Technical Outlook For Saturday March 3rd

Crude oil attempted to extend recent rally last week and hit as high as 110.55. But upside was limited there on steep loss in momentum. A short term top is likely formed. Initial bias is neutral this week for some consolidations. At this point, we'd expect downside of the consolidation to be contained by 38.2% retracement of 95.44 to 110.55 at 104.78 and bring rally resumption. Above 110.55 will target a test on 114.83 key resistance next.

In the bigger picture, the medium term up trend from 33.2 shouldn't be completed yet. Rise from 74.95 is indeed tentatively treated as resumption of such rally. Sustained break of 114.83 will target 61.8% projection of 33.2 to 114.83 from 74.95 at 125.40. On the downside, though, break of 95.44 support will indicate that correction pattern from 114.83 is going to extend further with another falling leg to 74.95 and below before completion.

In the long term picture, crude oil is in a long term consolidation pattern from 147.27, with first wave completed at 33.2. The corrective structure of the rise from 33.2 indicates that it's second wave of the consolidation pattern. While it could make another high above 114.83, we'd anticipate strong resistance ahead of 147.24 to bring reversal for the third leg of the consolidation pattern.

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ONG: Crude Oil Weekly Technical Outlook For Sunday Feb. 19th

From the staff at Oil N' Gold .........

Crude oil rose to as high as 104.14 last week and the break of 103.74 resistance confirmed resumption of 74.95. Initial bias remains on the upside this week and current rally should head towards 114.83 key resistance next. On the downside, break of 100.84 minor support is needed to signal short term topping. Otherwise, near term outlook will remain bullish even in case of retreat.

In the bigger picture, the medium term up trend from 33.2 shouldn't be completed yet. Rise from 74.95 is indeed tentatively treated as resumption of such rally. Sustained break of 114.83 will target 61.8% projection of 33.2 to 114.83 from 74.95 at 125.40. On the downside, though, break of 95.44 support will indicate that correction pattern from 114.83 is going to extend further with another falling leg to 74.95 and below before completion.

In the long term picture, crude oil is in a long term consolidation pattern from 147.27, with first wave completed at 33.2. The corrective structure of the rise from 33.2 indicates that it's second wave of the consolidation pattern. While it could make another high above 114.83, we'd anticipate strong resistance ahead of 147.24 to bring reversal for the third leg of the consolidation pattern.

WTI crude oil jumped to a 9 month high of 104.14 before ending the week at 103.24. The prompt month contract gained +4.63% during the week as driven by stronger than expected US data and unexpectedly decline in oil inventory. Brent crude oil also soared almost +2.0% although the Greek rescue deal dragged on. Tensions over Iran intensified.

Last week, there was conflicting news about oil exports from Iran to Europe. It was reported that Iran had decided to halt the supply of its crude to Europe before EU sanctions came into effect. However, it was denied by both spokesmen of both parties.

Saeed Jalili, Iran's top nuclear negotiator, wrote a letter last week to the EU's foreign policy head Catherine Ashton to seek negotiations about its nuclear program at the 'earliest possibility'. US' Secretary of State Hillary Clinton and Ashton said they and allies are reviewing the letter to determine next steps.

How the situation evolves remains highly uncertain and military actions from either side cannot be ruled out. This should continue to support oil prices.

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ONG: Crude Oil Weekly Technical Outlook

Crude oil rose to as high as 103.37 last week but failed to sustain above 100 psychological level and retreated. A short term top should be formed and initial bias is mildly on the downside for deeper pull back towards 94.65 support. Nevertheless, downside is expected to be contained by 89.16/17 cluster support (50% retracement of 74.95 to 103.37) and bring rebound. On the upside, above 100.15 minor resistance will turn bias neutral and bring consolidations. But break of 103.37 resistance is needed to confirm rally resumption. Otherwise, we'll stay near term neutral and expect more sideway trading first.

In the bigger picture, current development indicates the fall from 114.83 has finished at 74.95. The structure suggests it's merely a correction or part of a consolidation pattern. Hence, rise from 33.2 is not finished yet. As long as 89.16/7 support holds, we'd now favor a break of 114.83 resistance to resume the rally from 33.2. Meanwhile, break of 64.23 support is needed to confirm completion of the whole rise from 33.2. Otherwise, we'll continue to stay bullish in crude oil.

In the long term picture, crude oil is in a long term consolidation pattern from 147.27, with first wave completed at 33.2. The corrective structure of the rise from 33.2 indicates that it's second wave of the consolidation pattern. While it could make another high above 114.83, we'd anticipate strong resistance ahead of 147.24 to bring reversal for the third leg of the consolidation pattern.

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ONG: Crude Oil Weekly Technical Outlook

Crude oil's rise from 74.95 continued last week and reached as high as 99.20 and is picking up intraday upside momentum again towards the end of the week. Bias will continue to remain on the upside for 100 psychological level, which is close to 61.8% retracement of 114.83 to 74.95 at 99.60 and 100.62 resistance. Sustained break there will target 114.83 resistance next. However, note that a break of 95.29 minor support will suggest that a short term top is formed and flip bias back to the downside. Further break of 89.17 support will indicate completion of the rise from 74.95 and should turn outlook bearish for a test on this support level.

In the bigger picture, the choppy corrective structure indicates that price actions from 114.83 are merely a correction, or part of a consolidation pattern to decline from 114.83. Such decline should have completed at 74.95 after being supported above 50% retracement of 33.2 to 114.83 at 74.02. That is, rise from 33.2 is not finished yet. Sustained trading above 100 psychological level will affirm this case and would likely send crude oil through 114.83 high. On the downside, break of 74.95 will revive the case that rise form 33.2 is already finished at 114.83 and will turn outlook bearish.

In the long term picture, crude oil is in a long term consolidation pattern from 147.27, with first wave completed at 33.2. The corrective structure of the rise from 33.2 indicates that it's second wave of the consolidation pattern. While it could make another high above 114.83, we'd anticipate strong resistance ahead of 147.24 to bring reversal for the third leg of the consolidation pattern.

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ONG: Recent Developments Support Gold's Outlook

The G-20 summit ended Friday mainly focused on the sovereign debt crisis in the Eurozone. Two critical developments we observed were Italy's acceptance of surveillance and monitor by the IMF, as well as the failure to agree on the use of IMF resources. Both are expected to affect market sentiment towards the 17 nation region.

In the IMF program to monitor Italy's progress of the reforms, the world lender will provide independent and frequent assessments of the economic and financial conditions of Italy. It will also review on the Italian government's implementation of the fiscal policy such that credibility will be built up in the government regarding policy implementation.

The G-20 communiqué stated that G-20 countries 'stand ready to ensure additional resources could be mobilised in a timely manner'. The various channels that countries can contribute to the IMF include bilateral contributions, SDRs, and voluntary contributions to an IMF special structure such as an administered account.

AS happened last week was Greece's announcement and cancellation of the referendum of the EU agreement, FOMC meeting as well as ECB meeting. We will discuss in the precious metal section on these issues and their impacts on gold price......Check out Oil N'Gold.Com's commodities price movement charts.


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Oil N' Gold: Crude Oil Weekly Technical Outlook

From the staff at Oil N' Gold.Com, their weekend market update.......

Crude oil breached 75.71 to 74.95 initially last week but that was brief. It then rebounded strongly to as high as 84.00. Initial bias is mildly on the upside this week and further rebound might be seen to 84.77 and above. But there is no change in the bearish view that decline from 114.83 is not finished. Hence, we'd expect upside to be limited well below 90.52 key resistance and bring another fall. Below 79.08 minor support will flip intraday bias back to the downside. Break of 74.95 will target 70 psychological level.

In the bigger picture, medium term rebound from 33.2 is treated as the second leg of consolidation pattern from 147.24 and should have finished at 114.83 already. Current decline should target next key cluster support at 64.23 (61.8% retracement of 33.2 to 114.83 at 64.38) next. Sustained break will pave the way to retest 33.2 low. On the upside, break of 90.52 resistance is needed to invalidate this view or we'll stay bearish in crude oil now.

In the long term picture, crude oil is in a long term consolidation pattern from 147.27, with first wave completed at 33.2, second wave might be finished. Upon confirmation of medium term reversal, the third wave of the pattern should have started for a retest on 33.2 low.

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Oil N' Gold: Crude Oil Daily Technical Outlook For Wednesday Sept. 28th

The staff at Oil N Gold has been sticking to their long term Fibonacci numbers and it has served them well. What are they saying this morning......

Crude oil's recovery from 77.11 temporary low might extend further high. But in any case, we'll stay bearish as long as 90.52 resistance holds. We are still favoring the case that whole decline from 114.83 is ready to resume and break of 77.11 should send crude oil through 75.71 support to 70 psychological level next.

In the bigger picture, medium term rebound from 33.2 is treated as the second leg of consolidation pattern from 147.24 and should have finished at 114.83 already. Current decline should target next key cluster support at 64.23 (61.8% retracement of 33.2 to 114.83 at 64.38) next. Sustained break will pave the way to retest 33.2 low. On the upside, break of 90.52 resistance is needed to invalidate this view or we'll stay bearish in crude oil now.


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Oil N' Gold: Crude Oil Weekly Technical Outlook For Sunday Sept. 25th

Crude oil dropped sharply to as low as 77.55 last week and the development affirmed the case that consolidation from 75.71 is finished at 90.52 and whole decline from 114.83 is resuming. Initial bias remains on the downside this week with 82.21 minor resistance intact. Retest of 75.71 should be seen first. Break will target 70 psychological level and then 100% projection of 100.62 to 75.51 from 90.52 at 65.60. On the upside, above 82.21 minor resistance will turn bias neutral and bring consolidations. But recovery should be limited by 4 hours 55 EMA (now at 85.68) and bring fall resumption.

In the bigger picture, medium term rebound from 33.2 is treated as the second leg of consolidation pattern from 147.24 and should have finished at 114.83 already. Current decline should target next key cluster support at 64.23 (61.8% retracement of 33.2 to 114.83 at 64.38) next. Sustained break will pave the way to retest 33.2 low. On the upside, break of 90.52 resistance is needed to invalidate this view or we'll stay bearish in crude oil now.

In the long term picture, crude oil is in a long term consolidation pattern from 147.27, with first wave completed at 33.2, second wave might be finished. Upon confirmation of medium term reversal, the third wave of the pattern should have started for a retest on 33.2 low.

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Oil N' Gold: Crude Oil, Natural Gas, Gold and Silver Market Commentary

Crude Oil posted an inside day with a higher close on Tuesday as it consolidated some of Monday's decline but remains below August's uptrend line crossing. The high range close sets the stage for a steady opening on Wednesday. Stochastics and the RSI have turned bearish signalling that sideways to lower prices are possible near term.

Natural Gas closed lower on Tuesday as it extends the decline off last week's high. The low range close sets the stage for a steady to lower opening when Wednesday's night session begins trading. Stochastics and the RSI remain bearish signalling that sideways to lower prices are possible near term. If it extends this summer's decline, monthly support crossing is the next downside target. Closes above the 20 day moving average crossing would signal that a short term low has been posted.

Gold posted an inside day with a higher close on Tuesday as it consolidates some of this month's decline but remains below the 20 day moving average. The high range close sets the stage for a steady to higher opening on Wednesday. Stochastics and the RSI remain neutral to bearish signalling that sideways to lower prices are possible near term. If it extends this month's decline, the reaction low crossing is the next downside target. If it renews this year's rally into uncharted territory, upside target are hard to project.

Silver posted an inside day with a higher close on Tuesday as it consolidates some of this month's decline but remains below the July-August uptrend line crossing. The high-range close set the stage for a steady opening on Wednesday. Stochastics and the RSI remain neutral to bearish signalling that sideways to lower prices are possible near term. If it extends this month's decline, the reaction low crossing is the next downside target. Closes above the 20 day moving average crossing would temper the near term bearish outlook.

Oil N Gold: Crude Oil Weekly Technical Outlook

Crude oil's recovery should have completed at 89.00 after failing mentioned 89.61 support turned resistance as expected. Initial bias remains mildly on the downside for retesting 75.71 support first. Break there will confirm resumption of whole fall from 114.83 and should target 70 psychological level next. On the upside, though, break of 89.00 resistance will dampen this bearish view and bring stronger rebound towards 100.62 resistance instead.

In the bigger picture, medium term rebound from 33.2 is treated as the second leg of consolidation pattern from 147.24 and should have finished at 114.83 already. Current decline should now target next key cluster support at 64.23 (61.8% retracement of 33.2 to 114.83 at 64.38). Sustained break will pave the way to retest 33.2 low. On the upside, break of 89.61 resistance is needed to be the first signal of bottoming or we'll stay bearish.

In the long term picture, crude oil is in a long term consolidation pattern from 147.27, with first wave completed at 33.2, second wave might be finished. Upon confirmation of medium term reversal, the third wave of the pattern should have started for a retest on 33.2 low.

Posted courtesy of Oil N Gold.Com

Crude Oil Retreats amid Rate Hike Concerns in China

Heightened speculations on rate hikes in China have weighed on financial markets. Asian equities plunged amid worries that slowdown in Chinese growth will affect corporate profits while European bourses fluctuated between gains and losses. In the commodity sector, the front month contract for WTI crude oil fell after faltering below 86. Gold, however, climbed for another day to as high as 1377. Sovereign woes in the European periphery remained under the spotlight.

The market focus has once again turned to China. Zhong Jiyin, an economist with the Chinese Academy of Social Sciences wrote in China Daily that the country needs to raise interest rates by another 200 bps to curb inflation, given existing excess liquidity. Although the government has implemented a series of measures, including increasing RRR and raising margins for certain commodity futures, the impacts on inflation are not significant and CPI rose to 4.4% y/y in October, The market has been speculating that a rate hike can come over the next few weeks. According to Zhong, raising RRR may help ease the situation but is 'not enough to reverse it. The increase in the required reserve ratios for banks can prevent the rise of excess liquidity and ensure that the situation does not deteriorate further'. It will 'do little to get rid of the existing excess liquidity. Increasing interest rates is a common measure taken to check inflation'.

In Europe, it's obvious that the bailout for Ireland failed to stem contagion. The market currently expects the EU will need to rescue more peripheral European countries with Portugal being the one after Ireland. Indeed, apart from Portugal, CDS spreads and yield spreads between Spanish/Italian bonds and German bunds have continued to soar. According to Bloomberg news, Spain's banks may struggle to refinance about 85B euro in debt in 2011 and this may trigger the country to seek a bailout from EU/IMF.

China' rate hike and European sovereign concerns have dominated the headlines, overshadowing macroeconomic data. Germany's unemployment fell -9K to 3.14M, the lowest level since December 1992, in November. Unemployment rate stayed unchanged at 7.5%. We will have housing, manufacturing and confidence data in the NY session. Growth in S&P/Case-Shiller Composite 20 index may have eased to +1% in September. Chicago Fed will report its manufacturing PMI which probably dipped -0.7 to 59.9 in November. Consumer Confidence is expected to have improved to 52.7 in November from 50.2 in the prior month.

Posted courtesy of Oil N'Gold

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ONG Focus: Crude Oil and Gold Daily Technical Outlook For Friday Nov. 26th

Crude Oil Daily Technical Outlook

Crude oil jumped to as high as 84.53 but was limited by mentioned 85.42 resistance and weakens again. With 4 hours MACD crossed below signal line, intraday bias is turned neutral. As noted before, decline from 88.63 is still in favor to continue with 84.52 resistance intact. Break of 80.06 will target 61.8% retracement of 70.76 to 88.63 at 77.59 and below. Though, above 84.53 will now flip intraday bias back to the upside for retesting 88.63 high.

In the bigger picture, the steeper than expected fall from 88.63 is mixing up the outlook and argue that rise from 64.23 is possibly finished with three waves up to 88.63. In other words, it could be the second wave of consolidation from 87.17 and the third wave might have just started. We'll now slightly favor more decline as long as 88.63 resistance holds. Nevertheless, medium term rise from 33.2 is treated as the second wave of the consolidation pattern that started at 147.27. As long as 64.23 support holds, medium term rise from 33.2 is still in favor to extend to 50% retracement of 147.27 to 33.2 at 90.24 and possibly higher before completion.

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Gold Daily Technical Outlook

With 4 hours MACD crossed below signal line, Gold's recovery from 1329 should have completed at 1382.9 already. Intraday bias is now cautiously on the downside for 1315.8/1329 support zone. Decisive break there will complete a head and shoulder top reversal pattern and should turn outlook bearish for deeper fall. On the other hand, strong rebound from 1315.8/1329 will indicate that gold is merely in sideway consolidation and another would still be seen before topping.

In the bigger picture, rise from 1155.6 is treated as the fifth wave of the five wave sequence from 1044.5, which should also be fifth wave of the rally from 681 (2008 low). Such rally might still continue towards 161.8% projection of 931.3 to 1227.5 from 1044.5 at 1449.6 before completion. Though, we're aware of long term projection target of 100% projection of 253 to 1033.9 from 681 at 1462 and we'd anticipate strong resistance from there to bring medium term correction finally. On the downside, however, break of 1315.8 support will be an early alert of medium term reversal and will turn focus back to 1155.6 support for confirmation.

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Financial Markets Tumble on Geopolitical Tensions and Fears over China's Demand

What happened today has drawn a bit of the market focus from sovereign crisis in peripheral European economies. Unfortunately, the incidents only hurt market sentiment further, instead of recovering it. South Korean military reported that North and South Korea exchanged military fire this morning and at least 1 South Korean soldier was killed and 13 injured. Korean won and many Asian currencies weakened as investors sought shelter in the US dollar.

News said that China's biggest banks are close to reach their lending quotas and will stop making new loans to avoid exceeding the limits. Commodities especially oil and base metal prices were pressured as curbs in lending would slow investments and hence demand growth. Gold price remained resilient although early gains were partly pared amid broad based decline in commodity prices.

Tensions between the two Koreas have intensified since March when the sinking of a South Korean warship killed 6 sailors. North Korea denied any responsibility. Yonhap News reported North Korea the morning fired tens of artillery shells near the western border with South Korea, in prompting the South's military to fire back.

The attack has caused at least 1 South Korean soldier was killed and 13 injured. Market sentiment has been badly hurt with equities and growth currencies slumping. The MSCI Asia Pacific Index excluding Japan tumbled more than -2%. While South Korea's KOSPI index slipped -0.79%, Hong Kong's HSI plunged -2.67%, Singapore's Strait Times Index fell -2.03% while China's Shanghai Composite Index slid -1.94%. Korean Won fell -2.60% against the dollar while other currencies also fell.

Rumors said Chinese banks such as Industrial & Commercial Bank of China, Bank of China and Agricultural Bank of China have almost reached their annual lending quotas and will only lend as existing loans are repaid. New loans have reached RMB6.9 trillion as of November, approaching the government's cap of RMB7.5 trillion for the full year. Also weighed on commodity prices was the Customs' final trade data for October. Several commodities showed decline in imports, raising fears that China's demand has moderated. For instance, imports for both copper concentrate and refined copper tumbled -30% m/m in October. Imports for nickel, zinc and lead also contracted during the month.......Read the entire article and charts.



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Narrow Trading Continues Ahead of US Retail Sales

Commodities continue to in a consolidative manner in European session after Friday's selloff as the market awaits the next step the Chinese government walks in curbing inflation. Investors also hold breath as Ireland will discuss with EU officials on its financial problems in Brussels tomorrow. The front-month contract for WTI crude oil price hovers around 85 while fuel prices also grind higher. Gold changes little, trading below 1380 in both Asian and European session. PGMs extend weakness with platinum and palladium plunging below 1680 and 670 respectively.

Worries about Chinese tightening have weighed on oil and base metal prices as the government's measures, such as rate hike and raise in RRR, limit investments and hence, demand for these commodities. Indeed, China's impacts extend to precious metals. Recall that when the People's Bank of China raised near term interest rates last month (October 19), gold price slumped with the benchmark COMEX contract falling from 1371.7 to 1328 on that day. The impacts on PGMs will be as big as base metals as China is the world's largest auto producer and consumer.

According to Bombay Bullion Association, India’s gold imports jumped +65% y/y in October as driven by Diwali. India’s demand for other commodities such as oil and agricultural products should also surge in coming years. EIA’s Short-term Energy Report forecast annual growth in oil demand in India will be +7.95% in 2010 and +4.21% in 2011. The pace will exceed that of China (2010:+4.26%; 2011: 0.00%) although the absolute amount is still small.

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Crude Oil Weekly Technical Outlook For Saturday Nov. 13th

Crude oil edged higher to 88.63 last week but formed a short term top there and pulled back. Initial bias remains mildly on the downside this week for deeper decline to correct whole rise from 70.76. Nevertheless, strong support should be seen at 38.2% retracement of 70.76 to 88.63 at 81.80 and bring another rise. Whole rally from 64.23 is still expected to continue to 90 psychological level and above.

In the bigger picture, rise whole medium term rebound from 33.2 is still in progress. Such rise is treated as the second wave of the consolidation pattern that started at 147.27. Further rise could still be be seen towards 50% retracement of 147.27 to 33.2 at 90.24 and possibly further to 61.8% retracement at 103.70. However, break of 70.76 support will be the first warning that crude oil has topped out. Further break of 64.23 support will confirm and turn outlook bearish to start another medium term decline.

In the long term picture, rebound from 33.2 is not finished yet. But overall view remains unchanged. Crude oil is in a long term consolidation pattern from 147.27, with first wave completed at 33.2, second wave from there unfolding. Current development suggests that a breach of 61.8% retracement at 103.70 is likely. But we'll then start to focus on reversal signal again above 103.70.

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Oil N'Gold: Crude Oil Weekly Technical Outlook For Saturday Nov. 6th

Crude oil finally broken out of the consolidations from 84.43 and resumed the up trend to as high as 87.43. The close above 87.15 key resistance indicates that medium term rise is resuming. Initial bias remains on the upside this week and further rally should be seen to 100% projection of 64.23 to 82.97 from 70.76 at 89.50 next. On the downside, below 85.96 minor support will turn intraday bias neutral and bring retreat. But break of 79.25 support is needed to signal reversal. Otherwise, outlook will remain bullish.

In the bigger picture, the close above 87.15 key resistance indicates that whole medium term rebound from 33.2 has resumed. Such rise is treated as the second wave of the consolidation pattern that started at 147.27. Further should now be seen towards 50% retracement of 147.27 to 33.2 at 90.24 and possibly further to 61.8% retracement at 103.70. On the downside, break of 64.23 support is needed to confirm that crude oil has topped. Otherwise, we won't turn bearish.

In the long term picture, rebound from 33.2 is not finished yet. But overall view remains unchanged. Crude oil is in a long term consolidation pattern from 147.27, with first wave completed at 33.2, second wave from there unfolding. Current development suggests that a breach of 61.8% retracement at 103.70 is likely. But we'll then start to focus on reversal signal again above 103.70.

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Commodities Rally as RBA Unexpectedly Raises Rate

Crude oil rallied to a 2 week high yesterday as PMI in China, India and the UK and US all recorded strong gains in October. Moreover, comment from Saudi Arabia's oil minister that consumers are happy with oil between 70 and 90 drove price higher. The front month contract for WTI crude oil surged to as high as 83.86 before closing at 82.95, up +1.87%. Gold plummeted after rising to a 2 week high of 1366.4. Better than expected ISM boosted the dollar and sent gold lower to 1350.6 at close. The benchmark contract settled at -0.52%.

ISM Manufacturing Index surprisingly improved to 56.9 in October from 54.4 in the prior month. The market had expected a dip to 54. The growth was driven by 'new orders', 'employment' and 'production' indices but was partly offset by 'inventories' and 'supplier deliveries'. Meanwhile, personal income contracted -0.1% m/m in September after rising +0.4% in August. Personal spending grew +0.2% m/m, easing from +0.5% in August. Inflation remained subdued with the core PCE deflation staying flat from a month ago. Economic data were mixed but should not change the Fed's decision to implement additional easing measures in November.

At the Singapore Energy Summit, Saudi Oil Minister Ali al-Naimi said oil prices are likely to stay in a 'very comfortable zone' for longer time then most people think'. Oil market is 'very well supplied. A little bit oversupplied but it doesn't seem to be depressing the price'. Moreover, Ali al-Naimi said that consuming countries are happy with prices between 70 and 90, a range wider than what he described (70-80/bbl) as 'ideal'.

Commodities strengthened in Asian session today as the RBA unexpectedly raised the cash rate to 4.75%. Oil rose to 83.45 and gold climbed to 1357.2 after the news. The first rate hike in 6 months was to combat inflation which may accelerate in the medium term. The decisions caught the market by surprise as the Australia's CPI was disappointing in 3Q10. The interest rate differential between AUD and USD widened, sending AUD closer to parity with USD.

The Fed will begin the 2 day FOMC meeting today. More and more economists forecast policymakers will announce to buy Treasury securities of 500B first. The Congressional election is another focus. Opinion polls show that Republicans may take over House bur Democrats will remain control in the Senate. As we discussed yesterday, the outcome should not affect gold's uptrend in the long term.

Courtesy of Oil N'Gold


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