Crude Oil and Natural Gas Technical Outlook For Monday Morning

Nymex Crude Oil (CL)

As noted, recovery from 68.58 might still extend further for the moment. But still, upside is expected to be limited by 61.8% retracement at 76.87 and bring resumption of the fall from 82.0. On the downside, below 71.21 will indicate that recovery from 68.58 has completed and will flip intraday bias for this support first. Break will target 65.05 key support next. However, decisive break of 76.87 fibo resistance will argue that fall from 82.0 has completed and will turn focus back to this resistance.

In the bigger picture, at this point, crude oil is still limited by 55 days EMA (now at 74.49) and hence, we're favoring the case that medium term rise from 33.2 has completed at 82.0 with bearish divergence condition in daily MACD. Another fall is expected after finishing the current recovery from 68.58 and a break there will target 58.32 cluster support (50% retracement of 33.2 to 82 at 57.60). Break there will confirm this bearish case and indicate that the down trend from 147.27 might be resuming for another low below 33.2. However, sustained trading above mentioned 76.87 will dampen this bearish view and argue that another high above 82.0 might be seen before crude oil tops in 76.77/90.24 fibo resistance zone.....Nymex Crude Oil Continuous Contract 4 Hours Chart.

Nymex Natural Gas (NG)

Intraday bias in natural gas remains on the upside with 5.57 minor support intact. Current rally is still expected to extend further to 38.2% retracement of 13.694 to 2.409 at 6.72 next. On the downside, below 5.57 minor support will suggest that an intraday top is formed and bring consolidations. But downside should be contained well above 4.837 support and bring rally resumption.

In the bigger picture, medium term fall from 13.69 is treated as part of the long term consolidation pattern that started at 15.78 back in 2005 and might have completed at 2.409 already. Rise from 2.409 should not be completed yet and we would continue to anticipate an upside breakout of the recent range of 4.157/5.138 eventually. Above 5.318 will target 38.2% retracement of 13.694 to 2.409 at 6.72 and beyond. Nevertheless, break of 4.432 support will dampen this bullish case and turn outlook mixed again.....Nymex Natural Gas Continuous Contract 4 Hours Chart.


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Natural Gas Trading Trend – Daily Chart

Trend lines provide excellent levels for support and resistance and this chart is a perfect example of that. Not much to say about this chart other than UNG is trading at resistance and volume is big. This tells me we could see lower prices from here or some sideways price action first.




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Crude Oil Trend – Daily Chart

Oil had a great setup last week with many readers profiting from the oversold bounce off support which I pointed out on the daily chart last week. When buying into an oversold setup like this I scale in over 2-3 days in case prices dip lower as the selling dissipates. Average price was $35.75 and sold at first target of $37 for a 3.5% profit. Many of us still hold a core position with a tight stop.

The 60 minute chart shows this play and how the price popped once the sellers were cleared out.






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Crude Oil Trades Near $73 on Signs of Global Economic Recovery

Crude oil traded near $73 a barrel in New York after rising last week amid optimism demand will increase as the global economy recovers from its worst recession since World War II. Oil prices may gain this week on expectations that increasing fuel demand in the U.S., the largest energy consumer, will reduce inventories, according to a Bloomberg News survey. Reports this week are forecast to show increasing sales of existing and new homes in the country. “If the sentiment around demand recovery continues to improve I’d see upward support for oil prices,” Ben Westmore, a minerals and energy economist at National Australia Bank Ltd., said in Melbourne. “But an oversupply problem overshadows the market, and it’s hard to see oil pushing much higher.”

Crude oil for January delivery was at $73.29 a barrel, down 7 cents, in electronic trading on the New York Mercantile Exchange at 1:51 p.m. Singapore time. The contract, which expires today, rose 1 percent to $73.36 on Dec. 18, the highest settlement since Dec. 7. Futures climbed 5 percent last week, the most in two months, and have gained 64 percent this year. Prices had jumped after Iranian troops occupied an oil field in a disputed border region with Iraq. The troops withdrew from the al-Fakah well in the East Maysan field late Dec. 19 after an armed confrontation, Iraq’s deputy minister of oil Abdul Kareem al-Luaibi said yesterday. Separately, Iraqi television cited government spokesman Ali Al-Dabbagh as saying Iranian soldiers remained in Iraqi territory.....Read the entire article.


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Where is Crude Oil Headed This Week?

CNBC's Sharon Epperson discusses the day's activity in the commodities markets, and looks ahead to where oil is likely headed next week.





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Crude Oil Weekly Technical Outlook

Crude oil's recovery from 68.58 extend further to as high as 74.69 last week and is probably still in progress. Further rise could still be seen initially this week. But after all, upside is expected to be limited by 61.8% retracement at 76.87 and bring resumption of the fall from 82.0. On the downside, below 71.21 will indicate that recovery from 68.58 has completed and will flip intraday bias for this support first. Break will target 65.05 key support next. However, decisive break of 76.87 fibo resistance will argue that fall from 82.0 has completed and will turn focus back to this resistance.

In the bigger picture, at this point, crude oil is still limited by 55 days EMA (now at 74.52) and hence, we're favoring the case that medium term rise from 33.2 has completed at 82.0 with bearish divergence condition in daily MACD. Another fall is expected after finishing the current recovery from 68.58 and a break there will target 58.32 cluster support (50% retracement of 33.2 to 82 at 57.60). Break there will confirm this bearish case and indicate that the down trend from 147.27 might be resuming for another low below 33.2. However, sustained trading above mentioned 76.87 will dampen this bearish view and argue that another high above 82.0 might be seen before crude oil tops in 76.77/90.24 fibo resistance zone

In the long term picture, there is no change in the view that fall from 147.27 is part of the correction to the five wave sequence from 98 low of 10.65. While the rebound from 33.2 is strong and might continue, there is no solid evidence that suggest fall 147.27 is completed and we're still preferring the case that rebound from 33.2 is merely a corrective rise only. Having said that strong resistance should be seen between 76.77/90.24 fibo resistance zone and bring reversal for another low below 33.2 before completing the whole correction from 147.27.....Nymex Crude Oil Continuous Contract 4 Hours Chart.


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Growing Power of Iraqi Kurdistan Could Backfire on Tehran

Iran's strategy to break Iraq into three component territories, and to dominate those territories in order to reduce regional opposition and to gain unfettered access to Syria and the Mediterranean as a result of the Western invasion of Iraq in 2004, has had profound success. The country is now, at best, a federation, with elements of a slide toward confederacy or even the breaking away of some territory. Iran dominates, and will increasingly dominate, the Shi'a controlled central heartland and the Government of Iraq, particularly when US and Coalition forces depart. Iraq's northern, and predominantly Kurdish, region is now virtually an independent state. It is certainly an autonomous state.

And yet the solution which Tehran sought, the break-up of Iraq, may hold more problems for it than a unified Iraq, as the modern Iraqi state was created under British tutelage in 1922. Indeed, the Kurds, who had been financially swayed by both Baghdad and Tehran for decades, may feel sufficient strength that the foundations of a sovereign state can be laid. That sovereign state would, as the Iraqi Kurds have made clear — have aspirations on territory inside Iran, in Syria, and, significantly, Turkey (and possibly Azerbaijan and Armenia). In that respect, the Turkish-Iranian-Syrian rapprochement could not have come at a more propitious time. This reality, too, fuels the momentum in Ankara toward phasing out its strategic relationship with Israel. A Turkey-Armenia-Iran arrangement would help curtail Kurdish dreams of unity (even though the Kurdish tribes have historically been anything but trusting of each other, in many respects). And, fueling Ankara's concerns has been the heavy Israeli commercial involvement in the.....Read the entire article.


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Crude Oil Closes Higher, Signaling Higher Prices Are Possible Near Term

Crude oil closed higher due to short covering on Friday as it extends this week's rally. Profit taking tempered early session gains and the low range close sets the stage for a steady to lower opening on Monday. Stochastics and the RSI have turned bullish with this week's rally signaling that sideways to higher prices are possible near term.

Closes above the 20 day moving average crossing at 74.27 are needed to confirm that a short term low has been posted. If January resumes the decline off October's high, the 87% retracement level of this fall's rally crossing at 68.16 is the next downside target.

First resistance is the 20 day moving average crossing at 74.27
Second resistance is today's high crossing at 74.69

First support is the 10 day moving average crossing at 71.62
Second support is Monday's low crossing at 68.59

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Natural gas closed slightly higher on Friday as it extends this month's rally. Profit taking tempered early session gains and the low range close sets the stage for a steady to lower opening on Monday. Stochastics and the RSI are overbought but remain neutral to bullish signaling that sideways to higher prices are possible near term.

If January extends this month's rally, the 87% retracement level of this fall's decline crossing at 6.036 is the next upside target. Closes below the 20 day moving average crossing at 5.058 would temper the near term friendly outlook in the market.

First resistance is today's high crossing at 5.926
Second resistance is the 87% retracement level of this fall's decline crossing at 6.036

First support is the 10 day moving average crossing at 5.330
Second support is the 20 day moving average crossing at 5.058

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The U.S. Dollar closed higher on Friday as it extends this month's rally. The mid range close sets the stage for a steady opening on Monday. Stochastics and the RSI are overbought but remain neutral to bullish signaling that sideways to higher prices are possible near term.

If March extends its current rally, the 38% retracement level of the 2008-2009 decline crossing at 79.72 is the next upside target. Closes below the 20 day moving average crossing at 76.14 would temper the near term friendly outlook in the Dollar.

First resistance is today's high crossing at 78.50
Second resistance is the 38% retracement level of the 2008-2009 decline crossing at 79.72

First support is the 10 day moving average crossing at 77.02
Second support is the 20 day moving average crossing at 76.14


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Iraq Accuses Iran of Violating Border, Demands Withdrawal From Territory

Iraq’s National Security Council said today that Iran violated their shared border and Iraq’s “territorial integrity” and called on the Islamic republic to withdraw its forces from the region. Iraq summoned the Iranian ambassador in Baghdad and has begun “diplomatic steps” to resolve the situation, Iraqi government spokesman Ali Al Dabbagh said in a statement after a meeting of the security council.

Iranian forces entered Iraq at dawn yesterday and occupied an oil well in the East Maysan oil field, Zafer Nazmi, a border guard general, said earlier today. The Iranian forces positioned tanks around the well in the al-Fakah region, 450 kilometers (280 miles) south of Baghdad. The two neighbors have disputed the border of southeast Iraq for decades.

“The council stressed that the incursion is a violation of Iraq’s border and territorial integrity and called on Iran to withdraw from well 4 and lower the Iranian flag from the well tower immediately,” according to the statement. Crude oil for January delivery rose 71 cents, or 1 percent, to settle at $73.36 a barrel today on the New York Mercantile Exchange. It rose as much as 2.8 percent in intraday trading on news of the incursion.....Read the entire article.


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New Video: As the Dow Goes, So Goes the Country

The Dow has managed to claw back 50% of the losses that occurred in 2007 and 2008. The question now is, what’s ahead?

In our new video we share with you some of the ideas that we are looking at for this index. We believe we are at a very important crossroads and would not be surprised to see this market lose ground in the next 3 to 6 months. In the video we also show you exactly what we are looking at that will confirm a major top for this index.

Just click here to watch the new video and as always our videos are free to watch and there is no need to register.

Good trading,

Ray C. Parrish
President/CEO
Crude Oil Trader

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Crude Oil Bulls Attempt to Gain The Momentum Trading Above The 10 Day Moving Average

Crude oil was higher overnight as it extends this week's short covering rally above the 10 day moving average. Stochastics and the RSI are bullish signaling that sideways to higher prices are possible near term.

Closes above the 20 day moving average crossing at 74.33 are needed to confirm that a short term low has been posted. If January resumes the decline off October's high, the 87% retracement level of this fall's rally crossing at 68.16 is the next downside target.

Friday's pivot point, our line in the sand is 72.33

First resistance is the overnight high crossing at 74.29
Second resistance is the 20 day moving average crossing at 74.33

First support is the 10 day moving average crossing at 71.74
Second support is Monday's low crossing at 68.59

Just click here for your FREE trend analysis of USO

Natural gas was higher overnight and is extending this month's rally above the 75% retracement level of the October-December decline crossing at 5.807. Stochastics and the RSI are overbought but remain bullish signaling that sideways to higher prices are possible near term.

If January extends this month's rally, the 87% retracement level of the October-December decline crossing at 6.036 is the next upside target. Closes below the 20 day moving average crossing at 5.065 would temper the near term bullish outlook in the market.

Natural gas pivot point for Friday is 5.711

First resistance is the overnight high crossing at 5.920
Second resistance is the 87% retracement level of the October-December decline crossing at 6.036

First support is the 10 day moving average crossing at 5.344
Second support is the 20 day moving average crossing at 5.065

Just click here for your FREE trend analysis of UNG

The U.S. Dollar was lower due to profit taking overnight as it consolidates some of this month's rally. Stochastics and the RSI are overbought but remain neutral signaling that additional gains are possible near term.

If March extends this month's rally, the 38% retracement level of the 2008-2009 decline crossing at 79.72 is the next upside target. Closes below the 20 day moving average crossing at 76.13 would confirm that a short term top has been posted.

First resistance is Monday's high crossing at 78.28
Second resistance is the 38% retracement level of the 2008-2009 decline crossing at 79.72

First support is the 10 day moving average crossing at 76.99
Second support is the 20 day moving average crossing at 76.13



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Crude Oil and Natural Gas Technical Outlook For Friday Morning

Nymex Crude Oil (CL)

Crude oil's rebound extends further and further rise could still be seen as long as 71.21 minor support holds. Nevertheless, we'd still expect upside to be limited by 61.8% retracement at 76.87 and bring resumption of the fall from 82.0. On the downside, below 71.21 will indicate that recovery from 68.58 has completed and will flip intraday bias for this support first. Break will target 65.05 key support next.

In the bigger picture, we're favoring the case that medium term rise from 33.2 has completed at 82.0 with bearish divergence condition in daily MACD. The break of medium term trend line support last week affirms this case and should pave the way to 58.32 cluster support (50% retracement of 33.2 to 82 at 57.60) for confirmation. As noted before, rise from 33.2 is treated as part of the correction pattern that started at 147.27. Firmed break of 58.32 support will argue that the down trend from 147.27 might be resuming for another low below 33.2. On the upside, break of 79.04 resistance is needed to invalidate this view, otherwise, outlook will remain bearish.....Nymex Crude Oil Continuous Contract 4 Hours Chart.

Nymex Natural Gas (NG)

Natural gas rises further to as high as 5.926 so far and at this point, intraday bias remains on the upside for 61.8% projection of 2.409 to 5.318 from 4.157 at 5.955. Break will target 38.2% retracement of 13.694 to 2.409 at 6.72 next. On the downside, below 5.57 minor support will suggest that an intraday top is formed and bring consolidations. But downside should be contained well above 4.837 support and bring rally resumption.

In the bigger picture, medium term fall from 13.69 is treated as part of the long term consolidation pattern that started at 15.78 back in 2005 and might have completed at 2.409 already. Rise from 2.409 resumes as expected after consolidations from 5.318 completed. Current rally should now be targeting 38.2% retracement of 13.694 to 2.409 at 6.72 and beyond. Break of 4.432 support is needed to indicate that natural gas has topped. Otherwise, outlook will remain bullish.....Nymex Natural Gas Continuous Contract 4 Hours Chart.


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New Video: It’s Official Silly Season for Gold

We are already in the “silly season” and what we mean by that is after December 15 most traders are not serious about the markets and they’re not committed to any large positions for the balance of the year.

We’ve had a number requests to do a video on gold, so here it is. As you will see in the video, gold has fallen back to an area that should provide support, however it will remain choppy and thinly traded for the balance of the year.

We strongly recommend that if you’re not in gold, to wait until we see more interest and activity coming into 2010.

Just click here to watch the new video and as always our videos are free to watch and there is no need to register. Please take a minute to leave a comment and let us know where you think Gold is headed.

Good trading,

Ray C. Parrish
President/CEO
The Crude Oil Trader

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Where is Crude Oil Headed on Friday?

CNBC's Sharon Epperson discusses the day's activity in the commodities markets, and looks ahead to where oil is likely headed tomorrow.





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Crude Oil Gains Limited By Stronger U.S. Dollar

Crude oil closed steady at $72.66 a barrel today. Prices closed nearer the session high today. Gains were limited by a stronger U.S. dollar and weaker U.S. stock indexes. Crude prices are still in a two month old downtrend on the daily bar chart. The next downside price objective for the crude oil bears is to produce a close below solid technical support at this week's low of $68.59.

Natural gas closed up 30.5 cents at $5.767 today. Prices closed nearer the session high today and hit another fresh six week high. A bullish weekly storage report boosted nat gas today, along with recent cold U.S. weather and more in the forecast. Bulls have gained solid upside near term technical momentum recently. Prices are in a steep two week old uptrend on the daily bar chart.

Unleaded gasoline (RBOB) closed down 225 points at $1.8514 today. Prices closed near mid range today. Bears still have the near term technical advantage. The next upside price objective for the bulls is closing prices above solid technical resistance at $1.9500.

The U.S. Dollar index closed up 76 points at 78.10 today. Prices closed near the session high and hit a fresh three month high today. The bulls have recently gained good upside near term technical momentum to suggest that a near term low is in place.

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Has the dollar bottomed out?

We have made a number of videos on the dollar index and in our latest video we show you some of the aspects we outlined in our previous video that have come to pass.

The positive divergences on the MACD indicator which we discussed last time have kicked in and pushed the dollar index higher. Longer term major trend for the dollar index continues to be negative. In this short video you’ll see what the market is doing now and what we expect it to do in the future.

Just click here to watch the video and as always our videos are free to watch and there is no need to register. Please take a minute to leave a comment and let us know what you think of the video and the direction of the dollar.

Good trading,

Ray C. Parrish
President/CEO Crude Oil Trader


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Crude Oil Falls as Dollar Reaches Three Month High Against Euro

Crude oil fell for the first time in three days as the dollar strengthened against the euro, limiting the appeal of commodities as an alternative investment. Oil dropped as much as 2 percent as the dollar rose to a three month high against the European currency and U.S. equities declined. Futures are 12 percent below the year’s high of $82 a barrel reached Oct. 21. U.S. oil supplies are 6.4 percent above the five year average, the Energy Department said yesterday.

“The dollar’s stronger, and that’s for the most part the big thing here,” said Carl Larry, president of Oil Outlooks & Opinions LLC in Houston. Crude oil for January delivery fell 70 cents, or 1 percent, to $71.96 a barrel at 1:50 p.m. on the New York Mercantile Exchange. Earlier, futures touched $71.21 a barrel. Oil has risen 61 percent this year. The dollar strengthened to $1.4329 per euro at 1:51 p.m. in New York from $1.4531 yesterday. Earlier it touched $1.4305, the highest since Sept. 7......Read the entire article.

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Crude Oil: Lower Levels Ahead?

The crude oil market continues to soften and is now close to some important levels that we think we should look at. In our new video we look at what is happening in this market right now and what we expect to happen in the future.

As we have indicated in our earlier posts, we are now in the official “silly season” for trading. What we mean by that is the markets will be very thin, choppy and can be moved by a relatively small amount of money.

Just click here to watch the new video and as always our videos are free to watch and there is no need to register. Please feel free to leave a comment and let us know what you are thinking about the direction of crude oil.


Good trading,

Ray C. Parrish
President/CEO Crude Oil Trader


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Crude Oil Falls on Overnight Rally in the U.S. Dollar

Crude oil was lower overnight as it consolidates some of this week's short covering rally but remains above the 10 day moving average crossing at 71.80. Stochastics and the RSI are turning bullish hinting that a short term low might be in or is near.

Closes above the 20 day moving average crossing at 74.49 are needed to confirm that a short term low has been posted. If January resumes the decline off October's high, the 87% retracement level of this fall's rally crossing at 68.16 is the next downside target.

Thursday's pivot point, our line in the sand is 72.27

First resistance is Wednesday's high crossing at 73.55
Second resistance is the 20 day moving average crossing at 74.49

First support is Monday's low crossing at 68.59
Second support is the 87% retracement level of this fall's rally crossing at 68.16

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Natural gas was higher overnight and is challenging the 62% retracement level of the October-December decline crossing at 5.565. Stochastics and the RSI are overbought but remain bullish signaling that sideways to higher prices are possible near term.

If January extends this month's rally, the 75% retracement level of the October-December decline crossing at 5.807 is the next upside target. Closes below the 20 day moving average crossing at 4.993 would temper the near term bullish outlook in the market.

Natural gas pivot point for Thursday is 5.484

First resistance is Wednesday's high crossing at 5.569
Second resistance is the 75% retracement level of the October-December decline crossing at 5.807

First support is the 10 day moving average crossing at 5.188
Second support is the 20 day moving average crossing at 4.993

Today’s Stock Market Club Trading Triangles

The U.S. Dollar was sharply higher overnight as it extends this month's rally. Stochastics and the RSI are overbought but remain neutral signaling that additional gains are possible near term.

If March extends this month's rally, the 38% retracement level of the 2008-2009 decline crossing at 79.72 is the next upside target. Closes below the 20 day moving average crossing at 76.03 would confirm that a short term top has been posted.

First resistance is the overnight high crossing at 78.16.
Second resistance is the 38% retracement level of the 2008-2009 decline crossing at 79.72.

First support is the 10 day moving average crossing at 76.82.
Second support is the 20 day moving average crossing at 76.03.

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Crude Oil and Natural Gas Technical Outlook For Thursday Morning

Nymex Crude Oil (CL)

Crude oil's recovery from 68.58 might still be in progress for 38.2% retracement of 82.0 to 68.58 at 73.71 and possibly above. But after all, we'd expected upside to be limited by 61.8% retracement at 76.87 and bring fall resumption. Below 68.58 will target 65.05 key support next.

In the bigger picture, we're favoring the case that medium term rise from 33.2 has completed at 82.0 with bearish divergence condition in daily MACD. The break of medium term trend line support last week affirms this case and should pave the way to 58.32 cluster support (50% retracement of 33.2 to 82 at 57.60) for confirmation. As noted before, rise from 33.2 is treated as part of the correction pattern that started at 147.27. Firmed break of 58.32 support will argue that the down trend from 147.27 might be resuming for another low below 33.2. On the upside, break of 79.04 resistance is needed to invalidate this view, otherwise, outlook will remain bearish.....Nymex Crude Oil Continuous Contract 4 Hours Chart.

Nymex Natural Gas (NG)

Intraday bias in Natural gas remains on the upside with 5.37 minor support intact and current rise is still expected to continue to 61.8% projection of 2.409 to 5.318 from 4.157 at 5.955 next. On the downside, below 5.37 minor support will turn intraday bias neutral and bring retreat, probably to 4 hours 55 EMA (now at 5.221). Nevertheless, downside should be contained above 4.837 support and bring rally resumption.

In the bigger picture, medium term fall from 13.69 is treated as part of the long term consolidation pattern that started at 15.78 back in 2005 and might have completed at 2.409 already. Rise from 2.409 resumes as expected after consolidations from 5.318 completed. Current rally should now be targeting 38.2% retracement of 13.694 to 2.409 at 6.72 and beyond. Break of 4.432 support is needed to indicate that natural gas has topped. Otherwise, outlook will remain bullish.....Nymex Natural Gas Continuous Contract 4 Hours Chart.

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Crude Oil Falls as Dollar Reaches Three-Month High Against Euro

Crude oil fell for the first time in three days as the dollar strengthened against the euro, limiting the appeal of commodities as a currency hedge. Crude gained as the dollar rose to a three month high against the euro as Greece’s latest debt downgrade fanned concern that spiralling national debts may hamper the global economic recovery. The U.S. currency also gained after the Federal Reserve said yesterday the economy is strengthening and the deterioration in the labor market is abating.

“It is the dollar mainly because even though the Fed kept interest rates unchanged they did admit things are stabilizing in the U.S. economy,” said Andrey Kryuchenkov, a VTB Capital analyst in London. “Sentiment in the dollar is turning positive.” Crude oil for January delivery fell as much as $1.01, or 1.4 percent, to $71.65 a barrel in electronic trading on the New York Mercantile Exchange. It was at $72.05 a barrel at 11:35 a.m. London time. Yesterday, the contract added $1.97 to $72.66 in New York, the biggest gain in a month, after the Energy Department said U.S. crude inventories declined to the lowest since the week ended Jan. 9. Prices have gained 61 percent this year.....Read the entire article.


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Stocks and Commodities Are Trading Predictably

It’s been a great week so far. Stocks and commodities are moving as expected from my weekend trading report. I like to see the market unfold in a calm collected manner.

The US dollar has made a nice move in the past couple weeks. Although it has broken out of its down channel I think there is a lot of short covering going on making this bounce more powerful than others. Also it is important to note that it is near resistance which could dampen things around the $77-77.5 level. If the dollar heads back down I expect gold to start making a move back up which it started to do Wednesday.

Below are my thoughts and charts about what I think is unfolding for both stocks and commodities.

DIA – Dow Jones Index Fund
The DIA fund has performed just the way I thought it would. Push to a new high then sell down. Generally I would expect this move down to test my support level or trade near that level, but because we are heading into the holiday season and volume is light the market has a natural tendency to drift higher. I’m sure this is why it’s still trading near the high.

This new yearly high was enough to suck in breakout traders and only time will tell if they get follow through or get shaken out of this trade also. Oh, the joys of buying a breakout in an over bought market condition.



GLD – Gold Exchange Traded Fund
Gold broke down sharply from its trend channel and has settled into a support zone. Wednesday we saw a nice bounce but the question is, is this a rally or a sucker’s bounce?
I’ve found the best setups and moves occur after an ABC retrace. The black lines on the chart show exactly that type of price action. These retraces shake out most short term traders before starting a new rally. There is a thin dotted blue line showing a possible resistance trend line which would need to be broken after the ABC retrace pattern has formed if we want a low risk setup with a sizable win/loss ratio.



SLV – Silver ETF Trading Fund
Silver is in the same boat as its big sister (Yellow Gold). We just need to wait for a high probability setup to present its self before putting any of our hard earned money to work.



USO – Crude Oil Fund
USO has provided some great short term gains for anyone who used my analysis from my Sunday night report. The quote and chart below covers my thoughts for USO.

Sunday night report:
“Oil broke down out of its bull flag last week and is currently testing both trend line support and horizontal support levels. We could see a short term bounce here to the $37, 38 or 40 levels. Taking money off the table at each resistance level and raising your stop is an important money management strategy I use for this type of play.”



UNG – Natural Gas Trading Fund
Natural gas is still very much a speculative play as everyone thinks they will make huge money from this commodity.

This means two things in my opinion:
1. It’s still headed lower
2. After rallies the sellers jump back in.

UNG is trading near resistance and it could provide a great shorting opportunity in the coming days.



ETF Trading Conclusion:
Although it’s been a quite week in the market, I have really enjoyed it. Not sure if it is related to everything unfolding in a controlled manner or the holiday season nearing, or maybe both?

November and December have been quiet for our ETFs but I know we are on the verge of either a large move up or down in the coming weeks. Let’s watch the market and funds unfold and see if we can get another trade or two in before year end.

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Where is Crude Oil Headed on Thursday?

CNBC's Sharon Epperson discusses the day's activity in the commodities markets, and looks ahead to where oil is likely headed tomorrow.








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Crude Oil Closes Higher, Above the Critical 10 Day Moving Average

Crude oil closed higher due to short covering on Wednesday and above the 10 day moving average crossing at 72.24 thereby signaling that a short term low has likely been posted. The high range close sets the stage for a steady to higher opening on Thursday. Stochastics and the RSI are oversold and are turning bullish with this week's rally signaling that sideways to higher prices are possible near term.

Closes above the 20 day moving average crossing at 74.89 are needed to confirm that a short term low has been posted. If January resumes the decline off October's high, the 87% retracement level of this fall's rally crossing at 68.16 is the next downside target.

First resistance is today's high crossing at 73.55
Second resistance is the 20 day moving average crossing at 74.89

First support is Monday's low crossing at 68.59
Second support is the 87% retracement level of this fall's rally crossing at 68.16

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Natural gas closed lower due to profit taking on Wednesday as it consolidates some of this month's rally. The low range close sets the stage for a steady to lower opening on Thursday. Stochastics and the RSI are overbought but remain bullish signaling that sideways to higher prices are possible near term.

If January extends this month's rally, the 75% retracement level of this fall's decline crossing at 5.807 is the next upside target. Closes below the 20 day moving average crossing at 4.949 would temper the near term friendly outlook in the market.

First resistance is today's high crossing at 5.569
Second resistance is the 75% retracement level of this fall's decline crossing at 5.807

First support is the 10 day moving average crossing at 5.080
Second support is the 20 day moving average crossing at 4.949

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The U.S. Dollar closed slightly higher on Wednesday as it extends this month's rally. The high range close sets the stage for a steady to higher opening on Thursday. Stochastics and the RSI are overbought but remain neutral to bullish signaling that sideways to higher prices are possible near term.

If March extends its current rally, the reaction high crossing at 77.82 is the next upside target. Closes below the 20 day moving average crossing at 75.91 would temper the near term friendly outlook in the Dollar.

First resistance is Monday's high crossing at 77.57
Second resistance is the reaction high crossing at 77.82

First support is the 10 day moving average crossing at 76.52
Second support is the 20 day moving average crossing at 75.91

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Azlin Ahmad: Oil Demand in 2010

Azlin Ahmad, editor of crude oil at Argus Media, offers her take on what oil demand will be like in 2010, with CNBC's Chloe Cho & Rebecca Meehan.




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Small Energy Firms Yielding to International Giants

Exxon Mobil Corp.'s acquisition of XTO Energy Inc. is the latest sign of a changing of the guard in the U.S. oil patch, as the small companies that led an exploration boom in the past decade start to give way to the international giants. XTO, based in Fort Worth, Texas, was one of dozens of independent producers that pioneered a revolution in the U.S. natural gas industry in recent years. While global companies like Exxon and Chevron Corp. largely stayed on the sidelines, independents like XTO, Chesapeake Energy Corp. and Devon Energy Corp. leased millions of acres of land across the U.S. in search of new sources of gas and, to a lesser extent, oil.

But pumping the gas is proving to be a lot more expensive than finding it, which has led to an increasing number of joint ventures between the independent companies and the major multinational oil players, and with the acquisition announced Monday, an outright company sale. More deals are likely, analysts say, though they suggest that it may be hard to find buyers large enough to absorb the biggest independent companies.....Read the entire article.


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Oil Extends Gain After U.S. Government Releases Supply Report

Crude oil futures extended gains after the U.S. Energy Department released its report on stockpiles. Crude oil for January delivery rose $1.49, or 2.1 percent, to $72.18 a barrel at 10:31 a.m. on the New York Mercantile Exchange. Oil traded at $71.71 before the release of the report at 10:30 a.m. in Washington.....From Bloomberg News.


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Crude Oil Higher Overnight, Hinting a Short Term Low is Near

Crude oil was higher due to short covering overnight as it consolidates some of this month's decline. 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 74.82 are needed to confirm that a short term low has been posted. If January extends the decline off October's high, the 87% retracement level of this fall's rally crossing at 68.16 is the next downside target.

Wednesday's pivot point, our line in the sand is 70.38

First resistance is the 10 day moving average crossing at 72.10
Second resistance is the 20 day moving average crossing at 74.82

First support is Monday's low crossing at 68.59
Second support is the 87% retracement level of this fall's rally crossing at 68.16

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Natural gas was higher overnight as it extends last week's rally and tested the 62% retracement level of the October-December decline crossing at 5.565. Stochastics and the RSI are overbought but remain bullish signaling that sideways to higher prices are possible near term.

If January extends this month's rally, the 75% retracement level of the October-December decline crossing at 5.807 is the next upside target. Closes below the 20 day moving average crossing at 4.953 would temper the near term bullish outlook in the market.

Natural gas pivot point for Wednesday is 5.459

First resistance is the overnight high crossing at 5.569
Second resistance is the 75% retracement level of the October-December decline crossing at 5.807

First support is the 10 day moving average crossing at 5.088
Second support is the 20 day moving average crossing at 4.953

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The U.S. Dollar was lower due to profit taking overnight as it consolidates some of this month's rally. Stochastics and the RSI are overbought but remain neutral signaling that additional gains are possible near term.

If March extends this month's rally, the reaction high crossing at 77.81 is the next upside target. Closes below the 20 day moving average crossing at 75.90 would confirm that a short term top has been posted.

First resistance is Tuesday's high crossing at 77.58
Second resistance is the reaction high crossing at 77.81

First support is the 10 day moving average crossing at 76.50
Second support is the 20 day moving average crossing at 75.90

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Crude Oil and Natural Gas Technical Outlook For Wednesday Morning

Nymex Crude Oil (CL)

Crude oil's break of 71.35 resistance suggests that a short term bottom is in place and stronger rebound should now be seen towards 38.2% retracement of 82.0 to 68.58 at 73.71 and possibly above. Nevertheless, upside should be limited by 61.8% retracement at 76.87 and bring fall resumption. Below 68.58 will target 65.05 key support next.

In the bigger picture, we're favoring the case that medium term rise from 33.2 has completed at 82.0 with bearish divergence condition in daily MACD. The break of medium term trend line support last week affirms this case and should pave the way to 58.32 cluster support (50% retracement of 33.2 to 82 at 57.60) for confirmation. As noted before, rise from 33.2 is treated as part of the correction pattern that started at 147.27. Firmed break of 58.32 support will argue that the down trend from 147.27 might be resuming for another low below 33.2. On the upside, break of 79.04 resistance is needed to invalidate this view, otherwise, outlook will remain bearish.....Nymex Crude Oil Continuous Contract 4 Hours Chart.

Nymex Natural Gas (NG)

Natural gas's rally extends further as expected and reaches as high as 5.569 so far. At this point, intraday bias remains on the upside as long as 5.37 minor support holds and further rise should be seen to 61.8% projection of 2.409 to 5.318 from 4.157 at 5.955 next. On the downside, below 5.37 minor support will turn intraday bias neutral and bring retreat, probably to 4 hours 55 EMA (now at 5.159). Nevertheless, downside should be contained above 4.837 support and bring rally resumption.

In the bigger picture, medium term fall from 13.69 is treated as part of the long term consolidation pattern that started at 15.78 back in 2005 and might have completed at 2.409 already. Rise from 2.409 resumes as expected after consolidations from 5.318 completed. Current rally should now be targeting 38.2% retracement of 13.694 to 2.409 at 6.72 and beyond. Break of 4.432 support is needed to indicate that natural gas has topped. Otherwise, outlook will remain bullish.....Nymex Natural Gas Continuous Contract 4 Hours Chart.

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Crude Oil and Natural Gas Commentary For Tuesday Evening

Crude oil closed higher due to short covering on Tuesday as it consolidated some of this month's decline. The high range close sets the stage for a steady to higher opening on Wednesday.

If January extends the decline off October's high, the 87% retracement level of this fall's rally crossing at 68.16 is the next downside target. Closes above the 20 day moving average crossing at 75.24 are needed to confirm that a short term low has been posted.

First resistance is the 10 day moving average crossing at 72.63
Second resistance is the 20 day moving average crossing at 75.24

First support is Monday's low crossing at 68.59
Second support is the 87% retracement level of this fall's rally crossing at 68.16

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Natural gas closed higher on Tuesday as it extends this month's rally. The high range close sets the stage for a steady to higher opening on Wednesday. Stochastics and the RSI remain bullish signaling that sideways to higher prices are possible near term.

If January extends this month's rally, the 62% retracement level of this fall's decline crossing at 5.565 is the next upside target. Closes below the 20 day moving average crossing at 4.922 would temper the near term friendly outlook in the market.

First resistance is today's high crossing at 5.530
Second resistance is the 62% retracement level of this fall's decline crossing at 5.565

First support is the 10 day moving average crossing at 4.987
Second support is the 20 day moving average crossing at 4.922

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The U.S. Dollar closed higher on Tuesday as it extends this month's rally. The high range close sets the stage for a steady to higher opening on Wednesday. Stochastics and the RSI are overbought but remain neutral to bullish signaling that sideways to higher prices are possible near term.

If March extends its current rally, the reaction high crossing at 77.82 is the next upside target. Closes below the 20 day moving average crossing at 75.83 would temper the near term friendly outlook in the Dollar.

First resistance is today's high crossing at 77.57
Second resistance is the reaction high crossing at 77.82

First support is the 10 day moving average crossing at 76.30
Second support is the 20 day moving average crossing at 75.83

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Oil Rises, Snaps 9 Day Drop as U.S. Industrial Output Gains

Oil rose, snapping the longest decline since 2001, on a report that U.S. factories churned out more goods in November than anticipated, a signal that fuel demand will increase. Oil gained for the first time in 10 days as the Federal Reserve said that output at factories, mines and utilities climbed 0.8 percent last month, the fourth increase in five months. Germany’s IFO economic institute raised its 2010 outlook for growth in Europe’s biggest economy.

“The industrial production number is definitely a sign that the economy is improving, and it should lead to higher demand for oil and energy,” said Peter Beutel, president of trading adviser Cameron Hanover Inc. in New Canaan, Connecticut. Crude oil for January delivery rose $1.18, or 1.7 percent, to settle at $70.69 a barrel on the New York Mercantile Exchange. Futures have climbed 58 percent this year. Oil dropped 11 percent in the nine days ended yesterday to the lowest level since Sept. 29.....Read the entire article.

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Exxon and Nuclear Energy?

A YouTube post early on Monday explains why Exxon Mobil's "Outlook for Energy: A View to 2030" may have inadvertently revealed a future plan to get into the nuclear power business.

Check out the video to see if you're ready to buy into this conspiracy theory.



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Bloomberg Analysis: Crude Oil to Resume Decline After Bounce

Crude oil prices will probably continue to decline even after a short term rise, according to technical analysis by Newedge Group. West Texas Intermediate oil futures for February delivery are in “an underlying downtrend” that wouldn’t be affected by a small, short term rise in prices, Veronique Lashinski, a senior research analyst at Newedge USA LLC, said in a note to clients yesterday.

“Even though the daily chart points to a corrective bounce, we are not looking for a powerful correction,” Lashinski wrote. “As long as prices remain under $74.50, the overall picture will remain bearish.” The February contract traded for $71.90, up 4 cents, as of 10:21 a.m. London time today. Oil for January settled at $69.51 yesterday, marking the largest difference, or spread, between the two contracts closest to expiry since April.....Read the entire article.

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Crude Oil Higher on Overnight Consolidation, Bears Maintain The Clear Advantage

Crude oil was slightly higher due to short covering overnight as it consolidates some of this month's decline. Stochastics and the RSI are oversold but remain neutral to bearish signaling that sideways to lower prices are possible near term.

If January extends the decline off October's high, the 87% retracement level of this fall's rally crossing at 68.16 is the next downside target. Closes above the 20 day moving average crossing at 75.19 are needed to confirm that a short term low has been posted.

Tuesday's pivot point, our line in the sand is 69.44

First resistance is the 10 day moving average crossing at 72.53
Second resistance is the 20 day moving average crossing at 75.19

First support is Monday's low crossing at 68.59
Second support is the 87% retracement level of this fall's rally crossing at 68.16

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Natural gas was higher overnight as it extends last week's rally. Stochastics and the RSI remain bullish signaling that sideways to higher prices are possible near term. If January extends this month's rally, the 62% retracement level of the October-December decline crossing at 5.565 is the next upside target.

Closes below the 20 day moving average crossing at 4.916 would temper the near term bullish outlook in the market.

Natural gas pivot point for Tuesday is 5.311

First resistance is the overnight high crossing at 5.422
Second resistance is the 62% retracement level of the October-December decline crossing at 5.565

First support is the 10 day moving average crossing at 4.976
Second support is the 20 day moving average crossing at 4.916

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

The U.S. Dollar was higher overnight as it extends this month's rally and exceeded November's high crossing at 77.27. Stochastics and the RSI are overbought but are neutral signaling that additional gains are possible near term.

If March extends this month's rally, the reaction high crossing at 77.81 is the next upside target. Closes below the 20 day moving average crossing at 75.83 would confirm that a short term top has been posted.

First resistance is the overnight high crossing at 77.33
Second resistance is the reaction high crossing at 77.81

First support is the 10 day moving average crossing at 76.29
Second support is the 20 day moving average crossing at 75.83

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Crude Oil and Natural Gas Technical Outlook For Tuesday Morning

Nymex Crude Oil (CL)

With 4 hours MACD staying above signal line, some more sideway trading could be seen in crude oil. But such consolidation should be relatively brief. Below 68.59 will target 65.05 support next. Above 71.20 will bring stronger rebound to 4 hours 55 EMA (now at 72.30) and possibly above. But upside should be limited well below 79.04 resistance and bring fall resumption.

In the bigger picture, we're favoring the case that medium term rise from 33.2 has completed at 82.0 with bearish divergence condition in daily MACD. The break of medium term trend line support last week affirms this case and should pave the way to 58.32 cluster support (50% retracement of 33.2 to 82 at 57.60) for confirmation. As noted before, rise from 33.2 is treated as part of the correction pattern that started at 147.27. Firmed break of 58.32 support will argue that the down trend from 147.27 might be resuming for another low below 33.2. On the upside, break of 79.04 is needed to invalidate this view, otherwise, outlook will remain bearish.....Nymex Crude Oil Continuous Contract 4 Hours Chart.

Nymex Natural Gas (NG)

Further rise in Natural gas is still in favor with 4.837 support intact. Sustained trading above 5.318 will confirm that rise from 2.409 has resumed and should target 61.8% projection of 2.409 to 5.318 from 4.157 at 5.955 next. On the downside, through, a break below 4.837 support will indicate that recent consolidation is still in progress inside and another fall should be seen towards lower side of recent range near to 4.157. But after all, we'd expect downside to be contained there and bring an eventual upside breakout.

In the bigger picture, medium term fall from 13.69 is treated as part of the long term consolidation pattern that started at 15.78 back in 2005 and might have completed at 2.409 already. Rise from 2.409 should not be completed yet and we would continue to anticipate an upside breakout of the recent range of 4.157/5.138 eventually. Above 5.318 will target 38.2% retracement of 13.694 to 2.409 at 6.72 and beyond. Nevertheless, break of 4.157 support will dampen this bullish case and turn outlook mixed again.....Nymex Natural Gas Continuous Contract 4 Hours Chart.

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Phil Flynn: Dubious Dubai

Dubai gets a bailout and the risk appetite tries to come back but oil is still being held back by a load of supply. Supply gluts put oil back into a rut on signs that OPEC is cheating more each day. OPEC compliance to production targets fell to just 58% which is the worst score for the cartel since the financial crisis began. The biggest cheaters were Iran and Angola but also, believe it or not, Nigeria's production has come back much faster than expected after the country was plagued with rebel attacks on its infrastructure.

The reasons for the cheating on production quotas within OPEC are varied. There is the greed angle but part of it is there are those who actually want to purchase the oil. Oh sure it is easy to comply with your production targets when there are no buyers for your oil but not so much when you can actually find some buyers.....Read the entire article.


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Where is Crude Oil Headed on Tuesday?

CNBC's Sharon Epperson discusses the day's activity in the commodities markets, and looks ahead to where oil is likely headed tomorrow.




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Crude Oil Closes Lower, Setting The Stage For Continued Lower Prices

Crude oil closed lower on Monday and below the 75% retracement level of this fall's rally crossing at 70.23 as it extended the decline off October's high. The mid range close sets the stage for a steady to lower opening on Tuesday.

If January extends the decline off October's high, the 87% retracement level of this fall's rally crossing at 68.16 is the next downside target. Closes above the 20 day moving average crossing at 75.68 are needed to confirm that a short term low has been posted.

First resistance is the 10 day moving average crossing at 73.39
Second resistance is the 20 day moving average crossing at 75.68

First support is today's low crossing at 68.59
Second support is the 87% retracement level of this fall's rally crossing at 68.16

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Natural gas closed higher on Monday as it extends this month's rally. The mid range close sets the stage for a steady to higher opening on Tuesday. Stochastics and the RSI remain bullish signaling that sideways to higher prices are possible near term.

If January extends this month's rally, the 62% retracement level of this fall's decline crossing at 5.565 is the next upside target. Closes below the 20 day moving average crossing at 4.895 would temper the near term friendly outlook in the market.

First resistance is today's high crossing at 5.409
Second resistance is the 62% retracement level of this fall's decline crossing at 5.565

First support is the 10 day moving average crossing at 4.911
Second support is the 20 day moving average crossing at 4.895

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The U.S. Dollar closed lower due to profit taking on Monday as it consolidated some of last week's rally. The low range close sets the stage for a steady to lower 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 March extends its current rally, November's high crossing at 77.27 is the next upside target. Closes below the 20 day moving average crossing at 75.75 would temper the near term friendly outlook in the Dollar.

First resistance is last Friday's high crossing at 77.12
Second resistance is November's high crossing at 77.27

First support is the 10 day moving average crossing at 76.04
Second support is the 20 day moving average crossing at 75.75

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