Has the Yen and Dollar Projection Changed.....What Does the Yen and Dollar Rally Have in Store For Us?

We've been asked by an overwhelming number of readers for Chris's take on the currency markets and we think this is an amazing look he has shared with us today! Most of what you read about the currency markets and Forex trading is thin and lacks value. This is MUCH different...

Over the past few years Forex traders have really had to step up their game in order to continue making money in the currency market. Back in the day before currency trading was main stream, currencies used to trend in a direction for a long period of time with a low level of volatility. But with so many individuals now involved speculating on price action coupled with international concerns in most countries, the once slow and steady currency market now moves like the stock market with large price swings on a weekly and even daily basis.

With currency trading growing at an incredibly fast rate, stock traders have been giving tools to trade currencies using ETFs. If you are familiar with leveraged ETFS then you have most likely seen the huge opportunities (100,200 even 400% gains) which they can provide during major trends. Below are a couple major trends that both Forex and ETF traders should be keeping their eye on.

Japanese Yen – 30 year Monthly Chart
Over the last couple years China has taken most of Japan’s manufacturing, creating some terrible fundamentals overall for the Yen. With a weakening economy and the Yen making a major top in 1995, I feel we could be seeing a 16 year double top forming. This means shorting the Yen for a multiyear correction (bear market). This could generate some serious gains in the coming 2-5 years with very little work.

YCS 200% Short Yen Exchange Traded Fund – Daily Chart Setup
This fund allows stock/ETF traders to play the currency market within a regular trading account. The YCS fund is a 200% leveraged inverse fund, meaning this fund goes up in value as the Yen declines. For example, if the Yen drops 10% in value YCS will rise 20%.
Everyone has seen that infomercial to cook food with the saying “Set-It-And-Forget-It!” Well that’s more or less what this position will be like if we get a setup to buy this fund. This trade could easily last 5+ years with the potential to generate 150% – 400% gain.

US Dollar Weekly Chart Setup
Taking a look at the more common currency “The Dollar”. It has been forming a similar price pattern and is trying to form a base and bottom. The dollar does have one major issue which will most likely cause a breakdown thus an even lower value in the coming year. The problem is that the fed reserve constantly prints money increasing the money supply and devaluing the dollar (quantitative easing).

Currently, the dollar is trading within a large range and is poised for a short term bounce. There will not be any major trends until a breakout of this trading range to either the up or down side.

Major Currency Trends for Major Gains
In short, while playing shorter term trends is exciting and rewarding and keeps us busy on a daily/weekly basis, it is nice to have some long term positions at work which slowly mature into large percentage gains which boost you’re overall portfolio value each year with little work. Both the Yen and Dollar look like there is big potential just around the corner using the buy and hold mentality.

Each year I find 3-5 major opportunities where I can put some money to work, not tie up much capital and if they move 150% or more in my favor then those small investments boost my overall yearly portfolio gains substantially.

I do have another major trend setup forming which I’m calling the “Holy Cow” setup… which could be a real money maker this year. The exciting thing about it is that I have not seen ANYONE talk about this investment in years…

Just click here to get Chris Vermeulen's Trading Setups, Daily Pre-Market Videos, Intraday Analysis and Updates.

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USO Options Trade Setting UP.....High Altitude Bombing in Crude Oil

Our regular readers know that we follow options guru J.W. Jones very closely. And what a treat for us today as he gives us a blue print for trading options in the most fluid ETF for crude oil, the USO.

At the risk of stating the obvious, the recent market action in the commodities has been manic with wild gyrations of price in a wide variety of basic materials, metals, and energy. Given these wild fluctuations in price, I thought we could look at an options trade in USO that gives a high probability of success.

In order to give a bit of a conceptual framework for this sort of trade, let me share the way I look at these. Development of precision high altitude bombing during World War II resulted in a dramatic reduction in casualties while inflicting devastating consequences to enemy forces. I view the sort of option strategy described below as the equivalent of high altitude precision bombing. We will extract substantial profit without putting ourselves at high risk of damaging anti-aircraft fire.

As is shown on the daily price chart below, there is substantial support in the region of 35.60-36 provided by a recent swing low and the 200 period moving average.

In selecting the structure of option trades, I usually like to consider the volatility environment in which we currently operate. This is important because a very strong tendency of implied volatility is reversion to its mean. The knowledgeable trader factors this into his trades in order to put the wind at his back as much as possible. Trades can be selected and constructed to benefit (positive vega trades) or suffer (negative vega trades) from increases in implied volatility. As you can see in the chart below, implied volatility is currently in the lower quartile of its historic value for this specific underlying:

Given the current low volatility, let us look at a strategy that gives us substantial profit from an altitude of 50,000 feet and the ability to roll the trade forward for additional substantial profit. This trade is structured as a “ratio calendar spread”. Now don’t go getting hung up on the name, it is simply a two legged trade in which we buy a longer dated in-the-money call and sell a smaller number of out-of-the-money calls. The trade is diagrammed below:

For those getting used to these sorts of trades and trying to form an organizational framework, the trade can be thought of as a basic calendar spread where an additional contract of the long options is purchased. The addition of this extra contract removes the upside limit on our profitability which would exist in an ordinary calendar spread. As is often the case in option trading, this trade can also be thought of as a “first cousin” to a covered call structure where the long in-the-money contracts serve as a surrogate for long stock. I find it helpful to think of the various option constructions as individual members of several different families. Each family has a number of “family traits” that help make sense of the large number of potential constructions available to the options trader.

One of the characteristics of this family under discussion is the “Sham Wow” factor- “but wait-there’s more”. The “more” in this trade is the ability to “roll” the short calls forward as they expire or, more prudently, as they reach inconsequential value. For example, this trade would have been initiated by selling the February 37 calls at a value of around 57¢. When these calls reach minimal value, let us say 10¢ for discussion, they could be bought back, and the March calls sold to capture substantial additional premium. This process can continue for April, May, June, and July. These additional sales give the opportunity to reap additional profit for the trade.

The risks in the trade are:
1.USO breaks support and continues to sell off
2. Volatility collapses on the long leg of the trade

I have discussed both of these factors in the price chart and volatility chart above when I was developing the logic of the trade. While no guarantees exist for the behavior of either price or volatility, the current trade represents a reasonable balance between risk and probability in my opinion.

As with all our discussions, these considerations are presented for educational purposes and do not represent a recommendation. This is not a solicitation nor should it be considered financial advice. I am simply trying to demonstrate how to use the knowledge of option behavior to construct trades that benefit from high probability events. Bombs away!

Get More Trading Ideas From J.W. Jones at Options Trading Signals.com


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New Video: Let's Rate The Precious Metals Market

If some one was to ask "which has the strongest trend right now, Gold, silver or rare earth"? What would your answer be and how would you come up with your answer? In today's video we will be looking at the gold market, analyzing the silver market, and finally, checking into the rare earth market.

Before you look at the video, you may want to consider doing this as an exercise: Write down which market has the strongest trend, up or down. Then rate the markets. Number 1....Number 2....Number 3.... Once you see the video it will become clear to you how we rate these markets. It might surprise you.

If you're using MarketClub's "Trade Triangle" technology the answer is simple and you'll discover it in a matter of seconds. If you haven't used our "Trade Triangle" technology, this will be a good exercise for you to look and see just how powerful this technology is and how it can help your trading.

We all know that gold has had a big move, but so have silver and rare earth stocks. So what's next? We hope this video helps outline some ideas that you can put to good use in the future.

As always our videos are free to watch and there are no registration requirements. All we ask in return is that you Tweet about us and share this video with your friends. Also, please feel free to leave a comment and let us know what you are thinking. Enjoy the video and every success in trading,

Watch "Let's Rate The Precious Metals Market"


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Could One Fed President Spoil The Crude Oil Bull Run

It appears the first shot has been taken at QE2 as Richmond Fed President Lacker, not a voting member, has become the first to call for a roll back in the program. A program that virtually every investor believes the recent bull market relies on 100%. Lacker got the markets attention this week when he said the central bank should consider unwinding QE2, the 600 billion dollar asset buying program announced last November.

He said the "distinct improvement in the economic outlook since the program was initiated suggests taking revaluation quite seriously". But Lacker tried to make it clear he is still not ready to stop the program entirely right now since "strong readings on jobs and sustained consumer spending would warrant a rethink on growth".

World oil and commodity traders did consolidate oil prices overnight as most expect to see the same upward revisions in OPEC's and IEA's reports on Thursday as they saw in the US Energy Departments monthly report published yesterday which predicted increases in oil price and global demand.

Retail gas customers may get some relief this week as gasoline supplies gained 3.2 million barrels to 239.7 million barrels, the API said. The higher inventory numbers would put stockpiles at the highest level since February 26th 1993. Motor fuel inventories also increased 2.6 million barrels from 236.2 million a week earlier.

Here's your pivot, resistance and support numbers for Wednesdays trading.....

Crude oil was higher due to short covering overnight as it consolidates some of the decline off last week's high. Stochastics and the RSI remain bearish signaling that sideways to lower prices are possible near term. If March extends the decline off last week's high, January's low crossing at 85.11 is the next downside target. Closes above the 20 day moving average crossing at 89.60 would signal that a short term low has been posted. First resistance is the 10 day moving average crossing at 89.00. Second resistance is the 20 day moving average crossing at 89.60. First support is Tuesday's low crossing at 85.88. Second support is January's low crossing at 85.11. Crude oil pivot point for Wednesday morning is 86.98.

Natural gas was lower overnight as it extends the decline off January's high. Stochastics and the RSI are oversold but remain bearish signaling that additional weakness is possible near term. If March renews the decline off January's high, the 87% retracement level of the October-January rally crossing at 3.975 is the next downside target. Closes above the 20 day moving average crossing at 4.405 are needed to confirm that a short term low has been posted. First resistance is the 10 day moving average crossing at 4.262. Second resistance is the 20 day moving average crossing at 4.405. First support is the overnight low crossing at 3.996. Second support is the 87% retracement level of the October-January rally crossing at 3.975. Natural gas pivot point for Wednesday morning is 4.065.

Gold was slightly lower due to light profit taking overnight as it consolidates some of Tuesday's rally but remains above the 20 day moving average crossing at 1351.50. Stochastics and the RSI remain bullish signaling that sideways to higher prices are possible near term. If February extends the rebound off January's low, the reaction high crossing at 1394.70 is the next upside target. Closes below the 20 day moving average crossing at 1344.60 would temper the near term bullish outlook. First resistance is Tuesday's high crossing at 1368.70. Second resistance is the reaction high crossing at 1394.70. First support is the 10 day moving average crossing at 1344.50. Second support is January's low crossing at 1309.10. Gold pivot point for Wednesday morning is 1360.60.


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Peoples Bank of China "Resets" Crude Oil and Commodity Prices

Yes, that is about what it amounts to, the Chinese will determine world commodity prices. We are reminded again what really matters when it comes to oil and commodity prices now and in the future as the People's Bank of China announced it will raise the one year yuan lending rate to 6.06% from 5.81%, and the one year yuan deposit rate to 3.00% from 2.75%. Obviously the government in China is showing that they are much more serious about the recent inflationary issues that are threatening their economy than most investors thought. And the traders in the crude oil pits are paying attention.

This is shaping up to be a trade war and currency battle like has never been seen before as the U.S. Federal Reserve policy of QE2 keeps driving commodity inflation and demand while emerging markets around the world and especially the Chinese are looking to reel in their inflation woes and drive down those same commodity prices. So who is really in the drivers seat, who has the upper hand? We say the bank is the one that calls the shots and we all know who that is, this is what we get for depending on China to buy our debt while maintaining such a trade imbalance.

Crude oil was lower overnight as it extends the decline off last week's high. Stochastics and the RSI are bearish signaling that sideways to lower prices are possible near term. If March extends the decline off last week's high, January's low crossing at 85.11 is the next downside target. Closes above the 20 day moving average crossing at 89.82 would signal that a short term low has been posted. First resistance is the 10 day moving average crossing at 88.95. Second resistance is the 20 day moving average crossing at 89.82. First support is the overnight low crossing at 85.88. Second support is January's low crossing at 85.11. Crude oil pivot point for Tuesday morning is 88.07.

Natural gas was lower overnight as it extends the decline off January's high. Stochastics and the RSI are oversold but remain bearish signaling that additional weakness is possible near term. If March renews the decline off January's high, the 87% retracement level of the October-January rally crossing at 3.975 is the next downside target. Closes above the 20 day moving average crossing at 4.430 are needed to confirm that a short term low has been posted. First resistance is the 10 day moving average crossing at 4.316. Second resistance is the 20 day moving average crossing at 4.430. First support is the overnight low crossing at 4.069. Second support is the 87% retracement level of the October-January rally crossing at 3.975. Natural gas pivot point for Tuesday morning is 4.160.

Gold was higher overnight and trading above resistance marked by the 20 day moving average crossing at 1350.90. Stochastics and the RSI remain bullish signaling that sideways to higher prices are possible near term. Closes above the 20 day moving average crossing at 1350.90 are needed to confirm that a short term low has been posted. If February renews the decline off January's high, the 25% retracement level of the 2009-2010 rally crossing at 1296.40 is the next downside target. First resistance is last Friday's high crossing at 1360.00. Second resistance is the reaction high crossing at 1394.70. First support is January's low crossing at 1309.10. Second support is the 25% retracement level of the 2009-2010 rally crossing at 1296.40. Gold pivot point for Tuesday morning is 1348.90.


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Is Gold Playing Out The "Buy The Rumor Sell The News" Trade?

Do any of us really believe our fearless leader at the Federal Reserve when he makes statements like "we are not seeing any inflation". We think most traders and even the average investor knows this is just not true. As countries like Egypt see food prices surging. Over the past couple years everyone has been talking about how inflation will soon start and that has been one of the main driving forces for higher precious metals prices.

As we all know the market does the opposite as to what the majority of investors are doing. And while everyone has been buying metals in anticipation of inflation, we find it amusing how inflation for the first time is clearly presented on TV (Egypt issues) and we see gold and silver trading lower than they were a month ago. Seems like the buy the rumor sell the news lives is playing out. But the question everyone is starting to ask is how far will the metals correct?

We do not think they will drop much further but we do think it’s going to take 6-8 months before we see new highs in both gold and silver. They have had a nice run but now it looks as though they may cool off for a while. We could see some strength in the dollar for a little while and that should keep some pressure on metals even though inflation is clearly starting to show up around the world. Then the metals should start to climb the wall or worry again.

Below you'll find our updated charts on gold, silver and the gold miners index. Not much has really changed from last week analysis other than both gold and gold miners are getting deeper into a resistance level forming a bear flag pattern.

Gold Daily Chart
Gold is working its way up into a key resistance level and forming a possible bear flag.

Silver Daily Chart
Silver has been testing its key resistance level for a few days. It is normal to see silver push the limits and make larger moves simply because it is thinly traded and much more volatile. It looks ripe for a pullback at this area.

Gold Miners Daily Chart Index
Gold stocks have put in a nice bounce from the strong selling in January. As it pushes up into a resistance level it’s starting to look more attractive as a short play also. I still think the market has a couple more days to upward/chop before metals see possibly another thrust down, but that also depends on what the dollar does this week. The dollar does look ready to rally this coming week and that will put pressure on metals.

Conclusion For Gold Trading This Week:
In short, we an still neutral to bearish on gold, silver and gold stocks. Last week’s report showed these same patterns and it takes time for patterns to mature. The market always tends to take longer than we think to start a move.

At the moment we are waiting for metals to form a low risk entry point which looks to me like we could take a short position for another downward thrust in the market unfolds as the charts are hinting to before we buy gold for another long term hold as inflation rises.

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Higher Food Prices Supports Gold....Can it do the Same for Crude Oil?

Crude oil is trading slightly higher as oil is trying to recover from Fridays beating on disappointing U.S. non-farm payrolls data, still below the psychological barrier of $90. But gold takes the center stage with commodity traders again as higher food prices gives gold bulls a reason to cheer. Higher food prices usually supports gold prices due to increased inflation and political unrest like we are seeing in Egypt. And traders are asking "Is OPEC member Algeria next?" as food prices there soar.

Crude oil stochastics and the RSI are turning bearish hinting that a short term top might be in or is near. Closes below the 10 day moving average crossing at 89.13 would temper the near term friendly outlook. If March renews the rally off January's low, January's high crossing at 93.46 is the next upside target. First resistance is last Monday's high crossing at 92.84. Second resistance is January's high crossing at 93.46. First support is the 10 day moving average crossing at 89.13. Second support is January's low crossing at 85.11. Crude oil pivot point for Monday morning is 89.72.

Natural gas gapped down and was lower overnight as it renewed the decline off January's high. Stochastics and the RSI are oversold but are bearish signaling that additional weakness is possible near term. If March renews the decline off January's high, the 75% retracement level of the October-January rally crossing at 4.097 is the next downside target. Closes above the 20 day moving average crossing at 4.453 are needed to confirm that a short term low has been posted. First resistance is the 10 day moving average crossing at 4.372. Second resistance is the 20 day moving average crossing at 4.453. First support is the overnight low crossing at 4.187. Second support is the 75% retracement level of the October-January rally crossing at 4.097. Natural gas pivot point for Monday morning is 4.322.

Gold was lower overnight as it consolidates some of the rally off January's low. Stochastics and the RSI remain bullish hinting that a low might be in or is near. Closes above the 20 day moving average crossing at 1353.20 are needed to confirm that a short term low has been posted. If February renews the decline off January's high, the 25% retracement level of the 2009-2010 rally crossing at 1296.40 is the next downside target. First resistance is the 20 day moving average crossing at 1353.20. Second resistance is the reaction high crossing at 1394.70. First support is January's low crossing at 1309.10. Second support is the 25% retracement level of the 2009-2010 rally crossing at 1296.40. Gold pivot point for Monday morning is 1351.80.


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How Much Violence is to Much Violence For Crude Oil Prices?

World oil markets took prices higher overnight as pro Mubarak demonstrators took the streets of Egypt Thursday bringing a new level of violence and adding to the tension. But the added tension does not appear to get the attention of Suez Canal operators or customers as the canal maintains it's normal 50 ships a day average. 49 on Thursday and even 56 one day this week. Traders in the U.S. still seem to be more concerned with gasoline inventories being at an 18 year high in this country.

Maybe the news should be focused on the natural gas trade at this point. Record cold temps in my region, the desert southwestern U.S., have us experiencing natural gas shortages. A wake up call for those calling for wide spread use of natural gas as a vehicle fuel. We have a lot to do in the form of getting infrastructure in place before we can even begin to make that move. Is Washington listening? Gold may be the trade of the day as gold miner stocks continue to under perform. Gold stocks underperformed the price of gold this week and are also forming a bearish chart pattern. If this plays out then we can expect another sizable pullback in both gold stocks and the price of gold because this index typically leads the gold. And it looks like Fridays employment data will be front and center for gold and the markets today.

But we are ready and here is our numbers for the last day of trading this week......

Crude oil was slightly higher overnight as it extends this week's trading range. Stochastics and the RSI remain neutral to bullish signaling that sideways to higher prices are possible near term. If March renews the rally off last Friday's low, January's high crossing at 93.46 is the next upside target. Closes below the 10 day moving average crossing at 89.14 would temper the near term friendly outlook. First resistance is Monday's high crossing at 92.84. Second resistance is January's high crossing at 93.46. First support is the 20 day moving average crossing at 90.20. Second support is the 10 day moving average crossing at 89.14. Crude oil pivot point for Friday morning is 90.86.

Natural gas was steady to slightly higher overnight as it consolidates below key resistance marked by the 20 day moving average crossing at 4.463. Stochastics and the RSI are oversold but are neutral hinting that a short term low might be in or is near. Closes above the 20 day moving average crossing at 4.463 are needed to confirm that a short term low has been posted. If March renews the decline off January's high, the 62% retracement level of the October-January rally crossing at 4.225 is the next downside target. First resistance is the 20 day moving average crossing at 4.463. Second resistance is the reaction high crossing at 4.601. First support is last Friday's low crossing at 4.252. Second support is the 62% retracement level of the October-January rally crossing at 4.225. Natural gas pivot point for Friday morning is 4.386.

Gold was lower overnight as it consolidates some of Thursday's rally. Stochastics and the RSI are bullish hinting that a low might be in or is near. Closes above the 20 day moving average crossing at 1354.45 are needed to confirm that a short term low has been posted. If February renews the decline off January's high, the 25% retracement level of the 2009-2010 rally crossing at 1296.40 is the next downside target. First resistance is the 20 day moving average crossing at 1354.45. Second resistance is the reaction high crossing at 1394.70. First support is last Friday's low crossing at 1309.10. Second support is the 25% retracement level of the 2009-2010 rally crossing at 1296.40. Gold pivot point for Friday morning is 1345.00.


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The Gold and Oil Guy......Are Stocks and Gold Set to Move Higher?

Chris Vermeulen of The Gold and Oil.Com continues to bring us the best market analysis available anywhere. And today he shows us how he is trading this market with one foot in the bull camp and one foot in the bear camp.....

As most sophisticated investors and traders are aware, the U.S. Federal government has run up significant deficits and the long term debt burden is becoming a drain on Gross Domestic Product. That being said, most economists are discussing the possibility of a major decline in the value of the U.S. Dollar going forward as inflationary monetary policy begins to strangle growth. While that view point may prove right over the long haul, in the short run most traders are not likely expecting the U.S. Dollar to rally.

The U.S. Dollar is expected to reach a multi year cycle low in the near future. From the cyclical low, I expect the U.S. Dollar to regain a strong footing and work higher against the crowd. This is not to say that the U.S. Dollar will not eventually decline, but financial markets do not work that easily. Shorting the U.S. Dollar is a crowded trade and Mr. Market punishes crowded trades quite often by pushing prices the opposite of what the heard is expecting. Should the U.S. Dollar find a strong underlying bid, precious metals and domestic equities would feel the brunt force of such a move. While it remains to be seen if the U.S. Dollar rallies, if it does it will catch many traders and economists by surprise and the unwinding of the short dollar trade could unleash a wave of buying that we have not seen for quite some time.

Let’s take a look inside the market.....

Major Index Price Action Over The Past 12 Trading Sessions – Bearish
Below is a table showing the main indexes used for tracking the market. The interesting thing about this data is that the indexes which typically lead the market have been deteriorating for the past 12 days and no one has noticed.

In short, the Nasdaq, Russell and Dow Transport indexes typically lead the market

Every radio station and business channel covers the Dow and SP500 indexes therefor the general public hears the market performance based on the those indexes. The problem here is that the Dow only consists of 30 stocks and the SP500 only holds the top 500 companies which is not a full view of the overall market because there are thousands of stocks listed on the exchanges.

The analysis below can be taken two ways depending which boat you are in… which I will explain in just a minute. The way I see things is a bit of both, I’m not really in or boat or the other....rather I have one foot in each because I have seen the market do things which support both sides (manipulation and measured technical moves) during my 14 years trading.

Ok here are my thoughts/opinions/forecasts.....

Idea #1: Dow and SP500 indexes which 99% of the public use to gauge the market are moving higher on light volume. I feel because these indexes hold the stocks which everyone knows and is comfortable buying that this is the reason why they keep going up while the rest of the market silently erodes. It’s the simple thought that big money is moving out of leveraged positions (small cap stocks, transports, technology) in anticipation of a market correction, and the Average Joe continue to buy into brand name stocks boosting the Dow and SP500 thinking things are peachy.

Idea #2: We all know there is market manipulation, the question is how much of the price action is manipulation and how much is real supply and demand? No one will ever really know and that’s just part of the market and trading we have to deal with as traders. But I know there are traders out there blaming the Feds, POMO, and PPT for pushing the market up month after month. So the question is if these invisible forces manipulating the top 30-500 stock prices by buying them up which naturally boosts the Dow and SP500 indexes to keep everyone bullish on the market?

My thinking is that it’s a bit of both and that a correction is just around the corner.

Gold Miner Stocks Underperform Gold – Not a good sign
Gold stocks today (Wednesday) underperformed the price of gold and are also forming a bearish chart pattern. If this plays out then we can expect another sizable pullback in both gold stocks and the price of gold because this index typically leads the gold.

US Dollar Multi Year Support Trendline
The US Dollar is trading down at a key support level and if we get a bounce and possibly even a rally then we could see a sizable correction in stocks and commodities across the board. As we all know everyone is shorting the dollar, buying gold and buying food commodities…. So it makes sense that all these crowded plays are about to see a major shift. Now this is just my contrarian point of view and those of you who follow my work know I’m not bias in my trading. I just take the market one day or week at a time and play the setups. But you must step back and look at the larger picture and at least give it some thought....

Concluding Thoughts:
In short, the major indexes are moving higher on light volume which is not a strong sign, and other key indexes are pointing to lower prices. The question everyone wants to know is how low will this correction be? The answer to that is that you must play the trend as you never know if a trend will last 2 days or a year. I take the market one day at a time continually analyzing price action.

If you would like to get my detailed reports and daily videos covering my analysis please sign up for my newsletter at The Gold and Oil Guy.com

Chris Vermeulen


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Where is Crude Oil Headed on Thursday?

With all of the news coming out of Egypt and Brent Oil finding a new home above $100 you would think it was no where but up for WTI Crude. But Americans are finding little interest in the news out of the middle east as they are more concerned about weather or not the interstate system in the U.S. staying open then the Suez Canal staying open at this point. Most of the U.S. is being rocked by a severe winter storm and oil inventories continue to rise. Crude oil has moved higher this morning, topping $92 dollars as we go to print. But a quick slash of the magic crayon is still telling us that crude may have put in a double top in the first two weeks of the year and will have to top the January high of 93.46 to force us on the bull bus.

Winter storms or news out of Egypt, we'll still use the same numbers. Here's your pivot, support and resistance numbers for Thursday morning.....

Crude oil was higher overnight and poised to renew the rally off last Friday's low. Stochastics and the RSI remain bullish signaling that sideways to higher prices are possible near term. If March extends the rally off last Friday's low, January's high crossing at 93.46 is the next upside target. Closes below the 10 day moving average crossing at 89.12 would temper the near term friendly outlook. First resistance is Monday's high crossing at 92.84. Second resistance is January's high crossing at 93.46. First support is the 20 day moving average crossing at 90.23. Second support is the 10 day moving average crossing at 89.12. Crude oil pivot point for Thursday morning is 90.91.

Natural gas was lower overnight as it consolidates below key resistance marked by the 20 day moving average crossing at 4.470. However, stochastics and the RSI are oversold and are turning bullish hinting that a short term low might be in or is near. Closes above the 20 day moving average crossing at 4.470 are needed to confirm that a short term low has been posted. If March renews the decline off January's high, the 62% retracement level of the October-January rally crossing at 4.225 is the next downside target. First resistance is the 20 day moving average crossing at 4.470. Second resistance is the reaction high crossing at 4.601. First support is last Friday's low crossing at 4.252. Second support is the 62% retracement level of the October-January rally crossing at 4.225. Natural gas pivot point for Thursday morning is 4.404.

Gold was slightly higher overnight but continues to consolidate above the 25% retracement level of the 2009-2010 rally crossing at 1296.40. Stochastics and the RSI are neutral to bullish hinting that a low might be in or is near. Closes above the 20 day moving average crossing at 1354.60 are needed to confirm that a short term low has been posted. If February renews the decline off January's high, the 25% retracement level of the 2009-2010 rally crossing at 1296.40 is the next downside target. First resistance is the reaction high crossing at 1349.00. Second resistance is the 20 day moving average crossing at 1354.60. First support is last Friday's low crossing at 1309.10. Second support is the 25% retracement level of the 2009-2010 rally crossing at 1296.40. Gold pivot point for Thursday morning is 1335.00.


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