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We have had a number of requests to do a video on Fibonacci retracements and how they can be used in trading.
We put together this five minute lesson on Fibonacci trading and how we use this important tool to determine turning points in the market. Like all tools, it has its flaws and should be used with other complementary tools like our "Trade Triangle" technology.
As always, our videos are free to watch and there are no registration requirements. We hope you have the time to comment and share if this video helped you understand this important trading tool, or how you're already using it.
We hope you enjoy this brief lesson and it helps you understand how to use this important tool.
Crude oil closed higher on Monday as it extends the rally off May's low. Profit taking tempered early session gains and the mid range close sets the stage for a steady opening on Tuesday. Stochastics and the RSI are overbought but remain neutral to bullish signaling that sideways to higher prices are possible near term. If July extends the rally off May's low, the 62% retracement level of last month's decline crossing at 81.13 is the next upside target. Closes below the 20 day moving average crossing at 73.95 would confirm that a short term top has been posted. First resistance is today's high crossing at 78.92. Second resistance is the 62% retracement level of last month's decline crossing at 81.13. First support is the 10 day moving average crossing at 75.70. Second support is the 20 day moving average crossing at 73.95.
Natural gas closed lower due to profit taking on Monday and below the 10 day moving average crossing at 4.913 signaling that a short term top is in or is near. The low range close sets the stage for a steady to lower opening on Tuesday. Stochastics and the RSI are overbought and are turning neutral to bearish hinting that a short top might be in or is near. Closes below the 20 day moving average crossing at 4.660 would confirm that a short term top has been posted. If July extends the rally off May's low, the 62% retracement level of the November-May decline crossing at 5.429 is the next upside target. First resistance is last Wednesday's high crossing at 5.196. Second resistance is the 62% retracement level of the November-May decline crossing at 5.429. First support is today's low crossing at 4.826. Second support is the 20 day moving average crossing at 4.660.
The U.S. Dollar closed higher due to short covering on Monday as it consolidates some of this month's decline. The high range close sets the stage for a steady to higher opening on Tuesday as September might extend today's bounce off the 25% retracement level of the November-June rally crossing at 85.71. Stochastics and the RSI are oversold and are turning neutral to bullish hinting that a short term low might be in or is near. Closes above the 20 day moving average crossing at 87.28 would confirm that a short term low has been posted. If September extends this month's decline, the 38% retracement level of the November-June rally crossing at 83.83 is the next downside target. First resistance is the 10 day moving average crossing at 87.06. Second resistance is the 10 day moving average crossing at 87.06. First support is today's low crossing at 85.36. Second support is the 38% retracement level of the November-June rally crossing at 83.83.
Gold posted a key reversal down due to strength in equities and the US Dollar on Monday but not before posting a new all time high. The low range close sets the stage for a steady to lower opening on Tuesday. Stochastics and the RSI are diverging but remain bullish signaling that sideways to higher prices are possible near term. If August extends this year's rally into uncharted territory, upside targets will now be hard to project. Closes below the 20 day moving average crossing at 1225.80 are needed to confirm that a short term top has been posted. First resistance is today's high crossing at 1266.50. First support is today's low crossing at 1231.60. Second support is the 20 day moving average crossing at 1225.80.
The dollar drops while China rocks. China has either given in to pressure or has realized that its peg to the dollar may soon become counterproductive.China shook the global markets by announcing that they were going to allow their currency to be more flexible. As expected, oil soared on the news because the move will make oil cheaper in China and may inspire more Chinese buying of more commodities! Yet will this be for the long haul as a stronger yuan may slow exports by making Chinese goods more expensive overseas. For now though it is a commodity buying spree as the markets react to what most people feel will be the most obvious result.
The Wall Street Journal says that China’s central bank's statement Saturday came as a surprise and effectively marked the end of currency's de-facto peg to the U.S. dollar. It has been seen as a clear signal that China will let the yuan resume a gradual rise against the U.S. dollar after nearly two years of being effectively pegged around CNY6.83 to the U.S. dollar. Property developers were among the biggest gainers, as a stronger yuan would attract fund inflows and strengthen demand for real estate in China.....Read the entire article.
Crude oil was higher overnight as it extends this month's rally. Stochastics and the RSI are overbought but are neutral to bullish signaling that sideways to higher prices are possible near term.
If July extends the rally off May's low, the 62% retracement level of May's decline crossing at 81.13 is the next upside target. Closes below the 20 day moving average crossing at 73.98 are needed to confirm that a short term top has been posted.
First resistance is the overnight high crossing at 78.87
Second resistance is the 62% retracement level of May's decline crossing at 81.13
Crude oil pivot point for Monday is 76.73
First support is the 10 day moving average crossing at 75.76
Second support is the 20 day moving average crossing at 73.98
Natural gas was higher overnight as it consolidates below the 50% retracement level of the November-May decline crossing at 5.151. Stochastics and the RSI are overbought but are neutral to bullish signaling that sideways to higher prices are possible near term.
If July extends this month's rally, the 62% retracement level of the November-May decline crossing at 5.429 is the next upside target. Closes below the 20 day moving average crossing at 4.670 would confirm that a short term top has been posted.
First resistance is last Wednesday's high crossing at 5.196
Second resistance is the 62% retracement level of the November-May decline crossing at 5.429
Natural gas pivot point for Monday morning is 5.058
First support is the 10 day moving average crossing at 4.933
Second support is the 20 day moving average crossing at 4.670
Crude oil rose for a second day in New York amid signs of increased fuel demand in the U.S., the biggest energy consuming nation. Oil for July delivery gained 74 cents, or 1 percent, to $77.92 a barrel on the New York Mercantile Exchange at 9:03 a.m. Sydney time. Prices increased 4.6 percent last week, advancing for a second week, along with equities.
Oil may rise this week after U.S. gasoline demand climbed 1.6 percent to 9.34 million barrels a day, the highest level since August, according to a Bloomberg News survey. Eleven of 21 analysts, or 52 percent, predicted crude will increase. On June 18, oil gained 39 cents, or 0.5 percent, to settle at $77.18 a barrel in New York. The Standard & Poor’s 500 Index rose to the highest level in a month.
Brent crude for August settlement gained 84 cents, or 1.1 percent, to $79.06 a barrel on the ICE Futures Europe exchange in London. It dropped 46 cents, or 0.6 percent, to $78.22 a barrel on June 18.
Tighter regulation after the BP Plc oil spill in the Gulf of Mexico may delay exploration projects and cut global output by as much as 900,000 barrels a day if a moratorium on deep water drilling spreads beyond the U.S., Nobuo Tanaka, executive director of the International Energy Agency, said June 18.
Over the years we have seen the stock market make some pretty exciting moves for share holders. This year alone there have been some interesting events unfold causing wild market swings which most of us did not think could happen. Things like countries going bankrupt and the May flash crash. Also the BP Oil well leak which looks as though its about to kill not only businesses around the world but a large population of animals and fish which our planet will never be able to get back… It’s been a crazy year!
It sure would be nice if the financial situations between all he countries could be resolved, and if we could have some proper regulations on banks and the financial system to minimize fraud and manipulation. From the looks of everything we have a few years still before things get sorted out, fixed and some what stabilized.
Below are some charts showing where the Dow, Gold and Oil are currently trading and my thoughts on them.
DIA – Dow Jones Industrial Average ETF – Daily Chart
The past 12 years we have seen the DJIA go through some large bull and bear markets providing those with trading experience to generate large profits in both the bull and bear markets.
Recently we have seen the DJIA pullback and test the key pivot point and has started to bounce. Although this price action is positive I have my doubts about another bull market rally because of how the chart looks. I focus most of my analysis on chart patterns, volume and market internals. These allow me to monitor the overall heath of the market on a daily, week and monthly basis. Using these techniques I am able to pull money from the market consistently.
This year we saw some extremely heavy selling in May which could have been strong enough to shift the trend from an up trend to a down trend. I call these large volume candles Get Ready Spikes. If they are green then we are looking for higher prices but when they are red it means distribution is starting and lower prices could start to form in the coming months.
The DIA chart below looks to be forming a very large head and shoulders pattern which is currently trading near the top of the right shoulder. This pattern is very bearish and points to much lower prices in the next couple years if the major support level (neckline) is broken.
GLD – Gold Exchange Traded Fund – Daily Chart
The chart of gold shows the same cup and handle pattern which I have been talking about for a while now. Last week the price of gold made a new high breaking out of this pattern. We could see the price of gold start to work its way up to the $1400-1500 level over the next 3-6 months which calculates to $140-150 on the GLD etf.
USO – Crude Oil Fund – Daily Chart
USO oil fund has been trend down for a couple months and recently put in a nice bounce from the May low. I feel as though oil is forming a bear flag and could head lower in the coming weeks. Until it breaks the key resistance level traders must be cautious if they have any long trades right now.
Weekend Dow, Gold and Oil Trading Conclusion:
In short, I’m bullish on stocks for the short term and think we could retest the April high in the next month or two. But after that the market could roll over and from there we could see much lower prices. Or we could see the indexes breakout and start another leg higher… During volatile times like we are in now… we must trade with caution until the overall health of the market clearly indicates the direction of stocks. Until then focusing on low risk setups and taking profits quickly is the safest trading strategy.
Gold looks to be setup for a strong move higher. I am hoping for another dip to shake out some investors before it continues its march upwards. Oil on the other hand is trading near a key resistance level. Only time will tell if it can break through and start a rally. If not then we will see the market struggle.
Crude oil recovered further to 78.18 last week but lost momentum and turned sideway. Initial bias is neutral this week. Note that we'd still expect strong resistance at 61.8% retracement of 87.15 to 64.23 at 78.39 to limit upside to conclude the whole recovery from 64.24 and bring reversal. Below 73.26 minor support will flip intraday bias back to the downside. Further break of 69.51 will target a new low below 64.24. However, decisive break of 78.39 will dampen our view and target a retest on 87.15 high instead.
In the bigger picture, whole medium term rebound from 33.2 is likely completed at 87.15 already, just ahead of 50% retracement of 147.27 to 33.2 at 90.24. Further decline should be seen to 50% retracement of 33.2 to 87.15 at 60.18 at least. Also, as rebound from 33.2 is viewed as as a correction to the whole correction that started at 2008 at 147.27, we'd anticipate a break of 33.2 low in the longer term. On the upside, however, decisive break of 78.39 Fibonacci resistance will dampen our bearish view and argue that another high above 87.15 might be seen before crude oil tops.
In the long term picture, current development suggests that rebound from 33.2 is finished at 87.15, inside 76.77/90.24 fibo resistance zone as expected. Our view is that fall fro 87.15 would develop into the third falling leg of the whole correction from 147.27 and hence, we'd anticipate an eventual break of 33.2 low in the long term as such correction extends.....Here's the charts.
Oh sure it is easy to skewer the CEO of BP on Capitol Hill but what good does that do for the people suffering down in the Gulf! Democrats got their pound of flesh and spewed their anger and outrage at Tony Heyward, yet at the same time what are these sanctimonious politicians doing to help contain the damage in the Gulf of Mexico.The Deep Water Horizon exploded back on April 20, yet the Obama administration still refuses to make an all out effort to clean up and contain the spill.
Deroy Murdock of Scripps News writes that 3 days after the explosion, “the Dutch offered to sail to the rescue on ships bedecked with oil skimming booms. They also had a plan for erecting protective sand barricades."The embassy got a nice letter from the administration that said, "Thanks, but no thanks,'" Dutch consul general Geert Visser told the Houston Chronicle's Loren Steffy. Then after initially refusing to name them, the State Department on May 5 declared that 11 other countries and the UN also had offered skimmer boats and other assets and experts to prevent the oil from destroying.....Read the entire article.
The gold market jumped early on in trading today (6/17) based on economic data that came out indicating that the future wasn't quite as rosy as everyone first thought.
In today's video on gold, we share with you the 4 instruments that we are looking at and share with you our projections for the spot gold market.
As always our videos are free to watch and there are no registration requirements. Please feel free to leave a message and let us know what you think of the video and the current direction of the gold market.
Crude oil was lower due to profit taking overnight as it consolidates some of this month's rally. Stochastics and the RSI are overbought and are turning neutral hinting that a short term top might be in or is near. Closes below the 20 day moving average crossing at 73.49 are needed to confirm that a short term top has been posted. If July extends the rally off May's low, the 50% retracement level of May's decline crossing at 78.46 is the next upside target.
First resistance is Wednesday's high crossing at 78.13
Second resistance is the 50% retracement level of May's decline crossing at 78.46
Fridays pivot point for crude oil is 76.92
First support is the 10 day moving average crossing at 74.92
Second support is the 20 day moving average crossing at 73.49
Natural gas was slightly lower overnight as it consolidates some of Thursday's rally. Stochastics and the RSI are overbought and are turning neutral hinting that a short term top might be in or is near. Closes below the 20 day moving average crossing at 4.628 would confirm that a short term top has been posted. If July extends this week's rally, the 62% retracement level of the November-May decline crossing at 5.429 is the next upside target.
First resistance is Wednesday's high crossing at 5.196
Second resistance is the 62% retracement level of the November-May decline crossing at 5.429
Fridays pivot point for natural gas is 5.107
First support is the 10 day moving average crossing at 4.931
Second support is the 20 day moving average crossing at 4.628
Crude oil closed lower due to profit taking on Thursday as it consolidated some of this week's rally. The low range close sets the stage for a steady to lower opening on Friday. Stochastics and the RSI are overbought but remain bullish signaling that sideways to higher prices are possible near term. If July extends the rally off May's low, the 50% retracement level of last month's decline crossing at 78.46 is the next upside target. Closes below the 20 day moving average crossing at 73.23 would confirm that a short term top has been posted. First resistance is Wednesday's high crossing at 78.13. Second resistance is the 50% retracement level of last month's decline crossing at 78.46. First support is the 10 day moving average crossing at 74.48. Second support is the 20 day moving average crossing at 73.23.
Natural gas closed higher on Thursday and the high range close sets the stage for a steady to higher opening on Friday. Stochastics and the RSI are overbought but remain bullish signaling that sideways to higher prices are possible near term. If July extends the rally off May's low, the 62% retracement level of the November-May decline crossing at 5.429 is the next upside target. Closes below the 20 day moving average crossing at 4.580 would confirm that a short term top has been posted. First resistance is Wednesday's high crossing at 5.196. Second resistance is the 62% retracement level of the November-May decline crossing at 5.429. First support is the 10 day moving average crossing at 4.895. Second support is the 20 day moving average crossing at 4.580.
The U.S. Dollar closed lower on Thursday as it extends the decline off last week's high. 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 September extends the decline off last week's high, the 25% retracement level of the November-June rally crossing at 85.71 is the next downside target. If September renews this year's rally into uncharted territory, upside targets will now be hard to project. First resistance is the 20 day moving average crossing at 87.30. Second resistance is the 10 day moving average crossing at 87.61. First support is today's low crossing at 85.80. Second support is the 25% retracement level of the November-June rally crossing at 85.71.
Gold closed higher on Thursday as it extends this week's rally. The high range close sets the stage for a steady to higher opening on Friday. Stochastics and the RSI are turning bullish signaling that sideways to higher prices are possible near term. If August renews this spring's rally into uncharted territory, upside targets will now be hard to project. Closes below the reaction low crossing at 1198.10 are needed to confirm that a short term top has been posted. First resistance is last Tuesday's high crossing at 1254.50. First support is the 20 day moving average crossing at 1219.50. Second support is the reaction low crossing at 1198.10.
Hey, can I get some of those 20 billion dollars in BP's escrow account? This BP spill has caused me to lose sleep and has given me some emotional stress. That should be worth $20,000-30,000.00 at least! BP put up hoping to get Obama to shut up and perhaps to get assurances that the Obama administration and BP will both survive. Obama got a much needed political win and I am sure BP got some things in return as it appears the bitter rivals came together to save their own skins. BP made the deal to save their company and the President made a deal to save his presidency as it is getting harder and harder to guess which side of this duo was less popular with the American people.
This has become a political nightmare for Obama as the American people have been amazed at how inept he has been at responding to this crisis. He has put politics ahead of the best interests of the people down in the Gulf with his failure to waive the Jones act and by misleading the American people about expert calls for a drilling moratorium that has destroyed his rapport and trust with the American public. Even his own supporters were turning on him. Obama needed BP and BP needed Obama and it makes one wonder why the administration was not involved with and talking with BP all along. At the end of the day.....Read the entire article.
Crude oil fell from a six week high after U.S. jobless claims unexpectedly rose and manufacturing in the Philadelphia region expanded at a slower rate than forecast, casting doubt on the strength of the economic recovery. Oil dropped for the first time in four days as the Labor Department said the number of Americans seeking jobless benefits last week climbed to a one month high. The Federal Reserve Bank of Philadelphia’s general economic index decreased in June to the lowest level since August.
“The Philadelphia Fed and the jobless claims are sparking concerns about economic growth and the resulting energy demand or lack thereof,” said Kyle Cooper, a managing director at energy consultant IAF Advisors in Houston. Crude oil for July delivery lost $1.37, or 1.8 percent, to $76.30 a barrel at 12:40 p.m. on the New York Mercantile Exchange. Futures have risen 7.4 percent in the past year.
Initial jobless applications increased by 12,000 to 472,000 in the week ended June 12. Economists surveyed by Bloomberg News projected 450,000 claims, according to the median forecast. The number of people receiving unemployment insurance rose, while those getting extended benefits dropped.
The Philadelphia Fed’s index dropped to 8 this month from 21.4 in May. Readings above zero indicate growth in the regional gauge, which covers eastern Pennsylvania, southern New Jersey and Delaware. Economists forecast a decrease to 20, according to the median projection in a Bloomberg News survey.....Read the entire article.
Crude oil was lower due to profit taking overnight as it consolidates some of this month's rally. Stochastics and the RSI are becoming overbought but remain bullish signaling that additional short term gains are possible.
If July extends the rally off May's low, the 50% retracement level of May's decline crossing at 78.46 is the next upside target. Closes below the 20 day moving average crossing at 73.27 would confirm that a short term top has been posted.
First resistance is Wednesday's high crossing at 78.13
Second resistance is the 50% retracement level of May's decline crossing at 78.46
Thursday's pivot point for crude oil is 77.29
First support is the 10 day moving average crossing at 74.56
Second support is the 20 day moving average crossing at 73.27
Natural gas was higher due to short covering overnight as it consolidates some of Wednesday's decline. Stochastics and the RSI are overbought and are turning neutral hinting that a short term top might be in or is near.
Closes below the 20 day moving average crossing at 4.574 would confirm that a short term top has been posted. If July extends this week's rally, the 62% retracement level of the November-May decline crossing at 5.429 is the next upside target.
First resistance is Wednesday's high crossing at 5.196
Second resistance is the 62% retracement level of the November-May decline crossing at 5.429
Thursday's pivot point for natural gas is 5.046
First support is the 10 day moving average crossing at 4.884
Second support is the 20 day moving average crossing at 4.574
Crude oil closed up $0.67 at $77.61 a barrel today. Prices closed nearer the session high today and hit another fresh four week high on more short covering and fresh speculative buying interest. The bulls have upside near term technical momentum and have the overall near term technical advantage. My bias is that a market low is in place and that it's likely price action will remain choppy and in a trading range between the May low of $67.15 and psychological resistance at $80.00.
Natural gas closed down 20.0 cents at $4.989 today. Prices closed nearer the session low today on profit taking pressure from recent gains. Recent price action suggests a major market low is in place in natural gas and that prices can continue to trend higher in the near term. Prices are in a three week old uptrend on the daily bar chart.
The U.S. dollar index closed up 16 points at 86.45 today. Prices closed near mid range today. While no serious chart damage has occurred recently, the bulls have faded and need to show fresh power soon. The bulls still have the overall near term technical advantage.
Gold futures closed down $2.70 at $1,231.70 today. Prices closed nearer the session low today in quieter trading. Mild profit taking pressure was featured. The gold bulls still have the solid overall near term technical advantage. There are still no solid early technical clues to suggest a market top is close at hand. Prices are in a four month old uptrend on the daily bar chart.
Crude oil is set to surpass this year’s highs above $87 a barrel after breaching the 200 day moving average yesterday, a “major” chart resistance level, according to Schork Group Inc. Crude, which reached a 19 month high of $87.15 a barrel on May 3 before tumbling as much as 26 percent, yesterday settled above the moving average for the first time in a month. Prices also cleared the middle of two Bollinger Bands, which plot support and resistance levels based on volatility, further boosting chances of a rally, according to Stephan Schork, president of the Villanova, Pennsylvania based consultants.
“At this point it is now hard to argue against a retest of the highs from early May,” Schork said today in an instant message. Crude traded near a one month high after rising yesterday as U.S. equities gained, bolstering speculation fuel demand will increase. The contract for July delivery was at $76.92 in electronic trading on the New York Mercantile Exchange, down 2 cents, at 10:57 a.m. Singapore time. Futures have gained more than 9 percent in the past year.
Oil earlier this week was trending in the middle of two Bollinger Bands, indicating it may be “make it or break it time for the bulls,” Schork said in a note yesterday. With prices having advanced, the market may push toward the 100 day moving average, which is at $78.39 a barrel today, before the upper Bollinger Band at $79.18. The nine day Relative Strength Index also shows oil is “neither overbought nor oversold,” signaling short-term trends may be sustained, according to Schork.
“We have switched our bias to bullish on crude oil after concerns about offshore drilling and potential weakness in the dollar align to create significant upward potential despite an abundance of supply,” he wrote yesterday.
What do you get when you put together a Nobel Prize winning physicist, national labs and experts from academia and other oil companies? You get what could be called a 90% solution. President Obama addressed the nation from the Oval Office and said that his efforts to wage war against the oil spill that is assaulting our shores and our citizens would result in capturing up to 90% of oil leaking out of that BP well disaster. I would say that is an amazing effort. Yet while he wages war against this oil spill why he is not allowing our allies to help in the effort?
By not waving what is known as the Jones Act, or its real name the Merchant Marine act of 1920, he is slowing down the efforts to capture oil from the spill. The Jones act requires that all ships that carry goods in US waters be carried in U.S. flag ships, constructed in the United States, owned by U.S. citizens, and crewed by U.S. citizens and U.S. permanent residents. The problem is that this act would forbid the help of foreign ships that have the technology to.....Read the entire article.
Crude oil was lower due to profit taking overnight as it consolidates some of this month's rally. Stochastics and the RSI are becoming overbought but remain bullish signaling that additional short term gains are possible.
If July extends the rally off May's low, the 50% retracement level of May's decline crossing at 78.46 is the next upside target. Closes below the 20 day moving average crossing at 72.98 would confirm that a short term top has been posted.
First resistance is the overnight high crossing at 77.19
Second resistance is the 50% retracement level of May's decline crossing at 78.46
Crude oil's pivot point for Wednesday is 76.24
First support is the 10 day moving average crossing at 74.19
Second support is the 20 day moving average crossing at 72.98
Natural gas was slightly lower due to profit taking overnight as it consolidates some of the rally off May's low. Stochastics and the RSI are overbought but remain bullish signaling that sideways to higher prices are possible near term.
If July extends this week's rally, the 62% retracement level of the November-May decline crossing at 5.429 is the next upside target. Closes below the 20 day moving average crossing at 4.544 would confirm that a short term top has been posted.
First resistance is the overnight high crossing at 5.196
Second resistance is the 62% retracement level of the November-May decline crossing at 5.429
Naturual gas pivot point for Wednesday is 5.136
First support is the 10 day moving average crossing at 4.868
Second support is the 20 day moving average crossing at 4.544
Whether it is the spill in the Gulf, which continues unabated, or talk on Capitol Hill, the subject is crude oil. Today we received a signal by way of our weekly "Trade Triangle" to get long crude oil.
In this new brief video, we show you the exact levels to keep your eye on and also where a logical stop would go for this position. We have had a lot of questions on Fibonacci retracements lately and this video goes into detail about that phenomenon and how you can best use it.
As always our videos are free to watch and there are no registration requirements. We are always interested in your views so please leave us a comment and let us know what you think about the direction of crude oil.
