Technical Charts From The Gold and Oil Guy

Commodities took a breather last week, while stocks slowly continued their march higher. This week (Monday) commodities moved lower with profit taking and fears of a much larger precious metals and broad market sell off being anticipated in the near future. While it sure looks like we are ready for a pullback in entire market we just may not get one for some time. We could get higher prices for 2-6 weeks still.

Everyone is anticipating a market correction, which is identical to what everyone thought back in March, yet prices continued to rise for two more months (June). I am anticipating a sharp 1-3 day pullback but that is just what happens during rallies. Sellers are quickly met with buyers and the rally continues.

Take a looks at the index DIA back in April and May, you see sharp pull backs then big bounces higher. I think we are at this point now. Also small cap stocks are still holding up better than large cap stocks. This is important because I look at small cap stocks as a leading indicator for the broad market.

USO ETF – Crude Oil Prices – Daily Chart
Crude oil broke out last week and is now taking a breather as it moves sideways. Oil could quickly go either direction from here. Could be a double top in crude oil prices or it could be a large bull flag which points to much higher prices. We continue to watch as it unfolds.


UNG – Natural Gas – Daily Chart
Natural gas is not to exciting at this time. It still needs 1-3 week of price action before I will be looking to enter into a position.


Commodity Trading Conclusion
Overall the entire market is unstable. The US dollar looks ready for a big bounce or a big breakdown, same with Precious Metals, Oil and the broad market. Times like this become very difficult to trade because so many investments are at extremes. They are either way over bought or way over sold. I have really tightened up on my trading in the past 2 weeks because of this situation. My position sizes are small and I am taking profits quickly. Until we get some type of pullback/profit taking in the market I do not feel comfortable putting much money to work. I think this is how most traders are feeling right now.

I would not clear the slate and sit in cash though, as I mentioned at the beginning of the report we could see prices claw their way higher for some time so.

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Crude Oil Signals a Short Term Top

Crude oil closed lower on Monday as it extended last week's trading range. The mid range close sets the stage for a steady opening on Tuesday. Stochastics and the RSI are overbought and are turning bearish hinting that a short term top might be in or is near.

Closes below the 20 day moving average crossing at 66.77 are needed to confirm that a short term top has been posted. If September extends the rally off July's low, the reaction high crossing at 74.25 is the next upside target.

First resistance is last Friday's high crossing at 72.84
Second resistance is the reaction high crossing at 74.25

First support is the 10 day moving average crossing at 69.55
Second support is the 20 day moving average crossing at 67.30

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The U.S. Dollar closed higher on Monday as it extended last Friday's breakout above the 20 day moving average crossing at 78.94 confirming that a short term low has been posted. The high range close sets the stage for a steady to higher opening on Tuesday. Stochastics and the RSI are bullish signaling that sideways to higher prices are possible near term.

If September extends today's rally, the reaction high crossing at 79.91 is the next upside target. Closes below the 10 day moving average crossing at 78.65 would temper the near term friendly outlook.

First resistance is today's high crossing at 79.51
Second resistance is the reaction high crossing at 79.81

First support is the 10 day moving average crossing at 78.65
Second resistance is last Wednesday's low crossing at 77.52

How to Use Money Management Stops Effectively

Natural gas closed lower on Monday as it extended last Friday's breakout below the 20 day moving average. The low range close sets the stage for a steady to lower opening on Tuesday. Stochastics and the RSI have turned bearish signaling that sideways to lower prices are possible near term.

If September extends today's decline, the reaction low crossing at 3.459 is the next downside target. If September renews the rally off July's low, the reaction high crossing at 4.261 is the next upside target.

First resistance is the 10 day moving average crossing at 3.78
Second resistance is last Monday's high crossing at 4.16

First support is today's low crossing at 3.61
Second support is the reaction low crossing at 3.46

Crude Oil Falls for Third Day in New York as Equities Decline

Crude oil fell for a third session in New York as equities declined and the dollar rebounded against the euro, reducing the need for commodities as an alternate investment. Oil dropped as U.S. equities declined after four straight weeks of gains. Those increases left the Standard & Poor’s 500 Index trading at its highest level relative to earnings in more than four years. The dollar gained for a fifth day.
“Traders are just looking toward the Dow and the S&P and selling off, because we’ve had a pretty substantial run up,” said Brad Samples, a commodity analyst for Summit Energy Inc., an energy management company.....Complete Story

Minister of Oil Says Iran Will Not Lower Crude Price

Iran's Minister of Oil, Gholam-Hossein Nozari, said Monday that Iran will not lower its crude price, the official IRNA news agency reported. Iran has not lowered its crude price and will not lower it, Nozari told the reporters when asked about the rumors around the country's decision to lower its crude price. "None of oil producing countries will lower their oil prices and the prices will be decided by the market variables and the supply and demand mechanism," Nozari was quoted as saying. He said that policy making and raising prices are among key goals of Iran's Oil Ministry......Complete Story

Oil Steady in New York as Dollar Strengthens, Equities Decline

Crude oil was little changed after falling from a five week high as the dollar strengthened and equities dropped. Oil rose as much as 0.8 percent as the dollar gained for a fifth day, reducing the need for commodities as an alternate investment. A retreat in European and U.S. equities came after four straight weeks of increases left the Standard & Poor’s 500 Index trading at its highest level relative to earnings in more than four years. “The equity markets are kind of weak this morning and pushed us down at the open,” said Gene McGillian.....Complete story

Crude Oil Daily Technical Outlook

Intraday outlook in crude oil remains neutral for the moment as it's still staying in range of 69.70/73.36. Note that on the downside, Below 69.70 will turn intraday bias to the downside for deeper pull back. But after all, we'd expect downside to be contained above 62.70 and bring another rise that eventually send crude oil above 73.38 level. On the upside, sustained break of 73.36/38 key resistance level (100% projection of 58.32 to 68.99 from 62.7 at 73.36) will confirm rally resumption towards 38.2% retracement of 147.27 to 33.2 at 76.77. In the bigger picture.....Complete Article

Crude Oil and Natural Gas Under Pressure From Stronger Dollar

Crude oil was lower due to profit taking overnight as it extends last week's narrow trading range. Stochastics and the RSI are diverging and are turning bearish hinting that a short term top might be in or is near. Closes below the 20 day moving average crossing at 67.30 would confirm that a short term top has been posted.

If September extends the rally off July's low, the reaction high crossing at 74.25 is the next upside target.

Monday's pivot point, our line in the sand is 71.38

First resistance is last Friday's high crossing at 72.84
Second resistance is the reaction high crossing at 74.25

First support is the 10 day moving average crossing at 69.56
Second support is the 20 day moving average crossing at 67.30

How to Use Money Management Stops Effectively

The U.S. Dollar was lower due to light profit taking overnight as it consolidates some of last Friday's rally. Stochastics and the RSI have turned bullish signaling that sideways to higher prices are possible near term.

Closes above the reaction high crossing at 79.77 are needed to confirm that a short term low has been posted. If September renews this summer's decline, the 75% retracement level of the 2008-2009 rally crossing at 75.73 is the next downside target.

First resistance is the overnight high crossing at 79.25
Second resistance is the reaction high crossing at 79.81

First support is the 10 day moving average crossing at 78.61
Second support is last Wednesday's low crossing at 77.52

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Natural gas was higher due to short covering overnight as it consolidates some of last week's decline but remains below broken support marked by the 20 day moving average crossing at 3.774. Stochastics and the RSI have turned bearish signaling that sideways to lower prices are possible near term.

If September extends last week's decline, the reaction low crossing at 3.459 is the next downside target. Closes above the 10 day moving average crossing at 3.789 would temper the near term bearish outlook in the market.

Natural gas pivot point for Monday is 3.73

First resistance is the 10 day moving average crossing at 3.79
Second resistance is last Monday's high crossing at 4.16

First support is last Friday's low crossing at 3.66
Second support is the reaction low crossing at 3.46

Oil Prices Endanger Recovery

In "The Buzz" CNN's editor at large discusses the ramifications of high gas prices during an economic comeback.

Fridays Thoughts and Twitter from Rich Olney

From guest blogger Rich Olney

Twitter has been attacked by hackers. Which made posting impossible. Hopefully it is fixed by Monday. Anyways I was tweeting away on Friday as I believe we are at a turning point in crude. I am looking for a hard correction in the next few weeks and maybe early as Monday. I have some stuff I will post this weekend that shows why.

My reasoning is that the FED givith and the FED taketh. The BDI index rolled over this week. The Chinese are done buying commodities at least thats what the BDI says. 2nd I believe this rally in the dollar is for real and will last more than 1 or 2 sessions. Crude Oil traded sideways all week and there are cracks in the limestone foundation. Last we get the FED this week and I think the dollar rallies as the US will be the first to exit QE as may be hinted at the FED mtg. I think the correction started this afternoon target 870.



For commodities, I believe right now the story is the central banks, their respective currencies and their monetary policies. The US, weakened the US dollar which makes sense since that is a form a protectionism as it has the same effect as it encourages the buy American goods theme as foreign goods become more expensive. Now the foreign currencies are getting at the top of their trading ranges against the dollar the other central banks are taking notice. The most recent example is when the BOE surprise markets this past week by extending their QE by 50B billions, triggering a strong fall in Gbp. US demand for foreign goods is not going to improve if their currencies are to strong.

Foreign central banks don't want overly strong currencies as that is a drag on their economic recoveries. Now that China is cutting back on commodity importing (as reflected in the BDI), this is not supportive for the AUD. The play on a rolling over BDI, short the AUD!!! The Euro ie the anti dollar can do nothing to tighten and in fact may loosen as they have the weak eastern europe dragging them down. The Canadians are talking up prospects of QE to take some wind out of the Looney. Canadians are not interested in currency parity as that would not help exports to their #1 trading partner the US.....Click here for the complete story and charts.

Visit Rich Olney's site Crude Oil Trading Small Specs. for some of the best crude oil trading analyst available.

Double Tops and Pivot Points Explained

Today we want to share with you a chart pattern that the pro’s use everyday to great effect. The chart pattern we will be looking at, is one of my favorites as it has a high reliability factor.

The chart pattern in this short video is well known inside the professional trading community. However, outside of the pro circle it seems to be shrouded in mystery.

In this short 3 minute video, we peel away the layers of mystery and show you step by step how you can personally benefit from this chart pattern that occurs in all time frames.

What’s amazing to me about this chart pattern, is the fact that after over 3 decades of real world trading, it continues to repeat itself.

Click Here To Watch The Video

With that fact on our side, we think it’s a safe bet that this chart pattern is likely stick around for the next generation of traders.

Please feel free to leave a comment to let us know what you think of the video.