Copper continues to remain under pressure as it sits close to the lows reached at the start of Jan 19. The price action is in a consolidation sideways pattern over the last two weeks, as Copper prices in a slowing weak global economy.
 
This contrasts with US stocks over the last two weeks that has seen a large bounce off its recent lows on the prospects that Powell & the FED are now looking cutting rates in 2019. The prospect of rate cuts is inflationary for hard assets, however Copper is not buying this premise at least for now.

Currently the price action for Copper is sitting between 26,680 resistance & 25,940 support. In addition the price is respecting its downtrend line as well. So moving forward we would need to see a clear breakout above both 26,680 & 27,135 resistance, before we see Copper following the bullishness of US stocks. Given the weakness its more likely we see the price move towards 25,940 soon.

Platinum's price action is showing a close resemblance to Copper's price action, as it also has not seen any recent bounce in the last two weeks of trading, while also hovering near its lows reached In Dec 18 & Feb 19.
 
Why this is relevant is because Platinum is utilized in multiple industrial applications in multiple industries within the manufacturing process. So just like Copper, the price action of Platinum at the beginning of the year saw a decent rally and new uptrend formed as the markets were pricing optimism on the global economy based on a trade deal being struck between the US & China.
 
Now the deal has collapsed, the price action has collapsed along with the deal. Platinum is also in a consolidation pattern as it currently is respecting $800 support after hitting $820 resistance last week. Given that global economic macro data remains weak as global trade slows, it likely like copper we see lower prices in the short term.

So if we see a break of $800 support, look for a move towards $780. If we see a move above $820 in the coming weeks, followed by a close above the 52 day moving average price of $845 - $850, then this would indicate a shift in optimism for the global economy.

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Crude Oil last week experienced the worse selloff for 2019 as it fell around -7% for the week. The price action has now confirmed the end of its uptrend, as well as confirming that the bears are back in total control of Crude. The reasoning for this is that the closing price on Friday is now comfortably sitting below its most recent low and support level of $60.40, which it smashed late in the week. In addition, the price action is also now firmly below the long term 52 day moving average (MA).
 
If you take a look at the chart back in late October 2018, which I have circled, you will notice a similar pattern shown. You an also see what followed next for Crude Oil, after the pattern was shown, closing below support and trading under the 52 day MA. Its not clear whether the same crash in prices is evident from the price action so far, but what is clear based on the weight of evidence from the chart, that at least over the next few weeks we are likely to see lower prices ahead, after we see some consolidation from the big moves seen last week.

Looking ahead for this week, I’m expecting to see some much needed consolidation with a potential move this week back to its old support now resistance, around $$60.40. This is because the price action at the end of the week respected support of $57.40 twice, with a double tweezer. The consolidation will allow the oversold price action to regroup as well as the 10 MA catch up to the current price action.
 
Provided Crude Oil holds and doesn’t firmly close above the $60.40 either this week or next, I’m looking for Crude Oil to rollover again soon and move back to $57.40 support, with an eventual target of $55 a barrel once we break the $57.40 support level.
 
If this scenario does eventuate it will likely also bring down the major stock indices of the Nasdaq, Dow & S&P 500. Of course in the era we now live in with the markets, we must also be aware of the possibility of the shock interventions of global Central Banks, when the markets are tanking, to reverse downside moves.

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Crude Oil suffered its second weekly fall last week following Trump’s tweets on OPEC & Gas prices. So far the market appears to be paying attention to Trump’s attempt to lower Oil.

Looking closely at the weekly Crude Oil chart, we can see that prior to breaking its uptrend line this week, the price on the weekly chart moved all the way back to a previous support (now resistance) level of $64.30. Once it reached this level, it made a few failed attempts to close above resistance.

This week's follow through selling, saw the price action breach the uptrend line that began in late December ‘18 similar to when the S&P 500 market rally started. The last time Crude Oil breached its uptrend line back in Oct 18 (see circled area), we saw the price of Oil fall further. Potentially -33% lower.

However, this time the breaching of its uptrend line has so far had different movements relative to the breach last October ‘18. For one, the price action of Oil is still trading above its 10 week moving average. Back in Oct 18 when it closed below the uptrend line it also closed below its 10 week moving average.

Another interesting point is back in October ‘18, the S&P 500 weekly price action was following in very similar lock step to Oil prices, with the S&P 500 also breaching its uptrend line & closing below its 10 week moving average. However, this week the S&P 500 has made a new all time high price.

So going forward we have to be open minded that we could see further pull backs ahead for Oil, while at the same time also looking out for the possibility that this could be a pullback / consolidation, within a long term rally even though its broken its uptrend level.

To become more bearish with Oil, we have to see a breach of its current support that it has so far been respected at $61.45, as well as a close below the 10 week moving average this week. If that happens, our next level of support to look for is around $59.

Conversely, to become bullish on Oil, we need to see support of $61.45 held this week, with a clear break above its $64.30 resistance level. If we see this occur, this would be a very bullish signal & a likely move to $67.70 would occur shortly after.

So for now we have to wait and watch to see what unfolds to gain a better understanding on where we head next.

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Gold’s price action this week has provided a few big shifts with its sell off towards the end of the week. Gold has now confirmed its right hand shoulder of a Head & Shoulder pattern, while simultaneously breaking its uptrend line which commenced in Nov / Dec 18.

The price action has also formed a lower low & lower high, which I covered last week to members. The final confirmation for a Head & Shoulders formation, which is a breach of its neckline / support level, appears to be a high probability event going forward. Whether this occurs this coming trading week or the next, Gold is looking likely to breach its major support at $1,280 & head back to longer term uptrend line shown around $1,240 - $1,260.

When you consider that the market today is now pricing a 76% chance of a rate cut in 2019, the price action of Gold relative to the future Fed funds rate direction is at odds. However the market is always right & we have to respect the price action currently being shown by Gold.

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Crude Oil Under Pressure From Rising US Production

Crude Oil is about to break its 13 month uptrend as rising US crude production is starting to break down the price of Crude Oil. This is despite OPEC announcing a supply cut some months ago to help stabilize the price of Crude Oil. 

If you take a look at the chart below of US  Crude production and Oil Rig count within the US, they both seemed to level out around September / October 2016 just as the last leg of the downtrend  of Crude Oil was playing out. Since making the lows late last year the rig count has been steadily rising with production levels rising along side the rig count albeit on a 1 - 2 month lag.

Record US Crude Production Leads To Record Glut

Since US crude oil production has been soaring for several months now, inventories have also been rising along with rising production. Compounding the issue is the US economy which has been slowing for close to two years now. Now the decline in the US economy is accelerating consumption demand for gasoline within the US is also falling. Hence you will notice on the chart below on the right the sudden spike higher in inventories. 

Crude Oil Monthly Chart Review

Since making multi year lows back in February 2016 touching USD $26.14 a barrel, Crude Oil had been steadily climbing for around 13 months. After closing above its downtrend line back in April 2016, Crude continued to march higher for the remainder of 2016 and into early 2017. With just 1 trading week left in the month of March, unless there is a major reversal this week Crude Oil is set to close below its 13 month uptrend with a large red candle.

Crude Oil Heading Towards $41.50 Target

Based on the current outlook of the Monthly chart with a clear break of the uptrend currently occurring for Crude Oil, the next level of support on a monthly chart is around the $41.50 - 60 level which is another $6.50 - $6.60 or 13.75% lower from the current price.

Looking at the momentum indicators below, they are both supporting the current weakness in the price, as Momentum even though is still positive is heading back towards zero. The stochastic momentum indicator is also showing that based on the current price of $48 would form a bearish cross. (See circled area within Stochastic indicator) Monthly stochastic indicators are usually more reliable indicator of change of trends as they are much longer time frame and take a long time to form.

Hedge Funds Change Direction As Crude Oil Prices Shifts

Up until as recently as February 2016 Hedge Funds had placed a record amount of long contracts (betting on higher prices) for Crude Oil. Since then Hedge funds have begun to reverse their bullish bets setting a new record for reducing the bets for higher prices. The swift change in sentiment among Hedge Funds and Traders was due to the price falling below the physiological $50 level.

Crude Oil - Weekly Chart Review

Taking a closer look at Crude Oil via the weekly chart you can see that the price tried to break higher numerous times back in January and February this year. However after reaching the the $53.80 - $53.95 level on several occasions the price collapsed a few weeks with a long red candle which I have circled on the chart.

Momentum Falls Below Zero

Momentum is currently sitting at -5.74 on the weekly chart having closed below zero in the first week of March as the bulls became exhausted and finally gave in to lower prices.

The weekly Stochastic momentum indicator has been falling for several weeks now confirming the weakness in price. Since both indicators are supporting the falls in price on the weekly and monthly chart, it suggests that there is a high probability that the weakness in Crude Oil will continue over the medium to long term.

Since Crude Oil has confirmed a close below the weekly uptrend 3 weeks ago, the next level of support on the weekly chart is $40.50 a barrel.

Watch For A Surprise Reversal Above $54

Although very unlikely to occur over the coming weeks, I suggest watching out for a potential reversal in price back to the current resistance level of just below $54 a barrel. There may be another attempt to break above $54 but will unlikely succeed with current oversupply issues facing the market with rising US production.  The reason why I suggest looking at for the reversal is if OPEC announces further cuts to their supply to attempt to stop the falls in price.

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New Gold Bull Market Rally Or A Bull Trap


Gold has started 2017 similar to 2016 with a strong performance, as well as outperforming most asset classes year to date. (See chart below). This out performance so far has shocked the market as Gold had been under performing the market since Trump won the election in November.

Now that Gold has rallied strongly in the first 2 weeks many investors and traders are now wondering if Gold will continue its out performance and generate another positive year for Gold.

Gold Monthly Chart Review

The monthly trend of Gold since 2011 does not bode well for the shiny metal over the long term. Since reaching the highs of just over $1,900 some 6 years ago, Gold has been on steady decline and still well within its long term downtrend. This is despite recording a positive gain for 2016.

The recent strength of Gold in January has pushed the price above resistance of $1,205, which is its first level it needs to close above by the end of the month. With approximately 2 weeks to go before the month is over its early to confirm the break of resistance.

Provided it can sustain the rally in price this month Gold will find its next level of resistance along its blue down trend line, which is currently around $1,310 - $1,315.

If Gold were to continue its strong performance over the next few months closing above its downtrend and $1,350 resistance level on a monthly basis. This would result in Gold making a reversal of its 6 year downtrend and starting a new bullish uptrend.  This scenario I believe is unlikely based on the current trend as well as the technicals.

Monthly Momentum Suggests Rally Is Temporary

Within the monthly chart I have added a Stochastic indicator that measures momentum. I utilize this indicator to assist in determining the overall strength of the trend and for trend reversals.

In 2016 the stochastic momentum was bullish as the Gold price for the first 7 months was rising. Once Gold stalled and began to fall as it reversed its trend, the Stochastic indicator had crossed over to the downside and began to fall, confirming the uptrend was over. (See circled area within Stochastic indicator)

Observing the stochastic indicator on the monthly chart you can see that momentum continues to head lower suggesting the reversal that started in August last year will continue over the longer term, despite the strong rise of Gold this month.

Note: 1. Stochastic Indicator is a lagging indicator. 2. The Stochastic indicator should not be utilized in isolation but rather in conjunction with other indicators to determine direction.

Weekly Gold Chart Review

The weekly chart of Gold suggests there is potentially more upside coming in the medium term as the price heads towards its weekly alternate downtrends. (See chart below)

Gold comfortably surpassed its prior $1,176 resistance level and now forms as new support level. This new support level is an area to watch out for when Gold retraces.

Key Levels To Watch As Gold Rally's

For investors and traders looking for higher prices for Gold, the key areas to watch as it moves higher is the $1,250 resistance level.

In addition its important to note the 2 alternate downtrend lines that have developed to watch out for as overhead resistance. These downtrend levels are $1,240- 45 & $1,285 -90.

Weekly Stochastic Turns Bullish

One of the reasons I believe at least within the medium term that Gold will make higher prices is the fact that Stochastic has crossed to the upside and confirms the change of trend within the weekly chart. (See circled areas on chart) This also suggests that momentum is on the bulls side for now.

Most likely target over the coming weeks is for Gold to hit resistance level of $1,250 before consolidating, as this target area has previously struggled to initially close above in 2016.

Lastly for the weekly chart review, if Gold fails to hold above the $1,176 support level in the coming weeks. Look for Gold to retrace all the way back to $1,132 support level.

Gold Daily Chart Review

The price action of Gold on the daily chart has been very strong over the last 2 weeks, with the vast majority of trading days Gold has closed higher as shown by the consecutive blue candles. This sudden burst has created a very sharp uptrend line for Gold as shown by the blue trend line at the bottom right of the chart. This is important to note because usually the steeper the trend line in either direction the harder it is to maintain the trend.

Overnight the price closed above $1,207 resistance level and now forms support on a daily basis. The next major level for Gold to reach is the $1,250 level of resistance.

However based on the current downtrend that Gold is still trading within, I believe Gold will also find it difficult to close above the resistance of the first downtrend line of $1,242 -44.

Gold's Momentum Approaching Peak Level

The stochastic indicator shows that momentum is still in support of the current rally on the daily chart with blue line above the red line. However the Stochastic indicator in most instances peaks out above the 90 level and eventually begins to fall. I have circled the prior 2 instances this has happened on the daily chart to illustrate what to look out for.

Note: The price action can continue to move higher in the short term if the Stochastic is above 90. It's more ideal to wait for stochastic to cross over and move lower for confirmation of potential reversal of trend.

Summary

From the review of all 3 time frames for Gold I believe we will be seeing a consolidation / pullback in the price of Gold soon. After a brief consolidation Gold will make another attempt to head higher over the medium term.

However the longer term prospects for Gold are not as favorable as Gold will run into strong resistance around $1,310 - $1,315 level based on the 6 year long downtrend line on the monthly chart.

Therefore the recent strong rally of Gold is most likely going to be a bull trap for investors who are holding it for the long term. However if your time horizon is shorter there will be opportunities in 2017.

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Gold has been on a wild ride since the US election results last Wednesday, climbing to a high on the day of the election of $1,336 before slumping lower at the end of the trading closing at $1,277.

Since last Wednesday investors have continued to dump the precious metal as the selling accelerated. On Monday morning the selling resumed as the world and investors continued to digest the shock victory of Trump and what this means for the US and the World.

During Monday's trading day Gold slowly recovered some of its losses to find support as investors bid Gold higher into Tuesday's trading, where it currently sits at $1,227.

Gold Chart Review

To gain a better understanding of the where Gold is most likely heading over the coming weeks, its always ideal to take a look at a longer term chart to see where its been in the past. 

If we take a look at the weekly chart of Gold below, you will notice that bullish uptrend that began in late December last year ended in September as it was unable to stay above its trend line. (See circle over price chart)

Since September Gold has been on a steady decline lower even though it made an attempt to climb higher towards its new down trend line (now at 1,300 level), before reversing and heading back down again to the current price of around $1,227.

Presently its only 15 dollars off its support line at $1,212 which previously was a strong support level during its uptrend cycle back through February to May this year.

Failure to hold the $1,212 level on a weekly basis, Gold's next support level is around the $1,176 level. If it was to reach the lower support level that would be another $36 lower from the $1,212 support level.

Given the big selloff last week, its quite possible that we may see a temporary rally higher potentially back to the $1,295 -$1,300 level before once again reversing and falling below the $1,212 support level towards $1,176 support as indicated in the chart. (See black lines on chart)

Lastly I have included the momentum indicator on the weekly chart, which is currently sitting at -93 to show that Gold is in a strong bearish position and firmly stuck in a new down trend.

Now that the market has decided that the big risk factor of the US election is over, the market has chosen the direction for Gold. Given the current technicals its unlikely the overall long term down trend direction will change for some time.

 With the daily chart below you can see that the selling as stopped for the time being as the $1,212 support level held after consecutive days of selling.

Similar to review of the weekly chart, its likely that Gold will stage a rally higher off the support level over the coming week or two. The most likely targets are the first resistance level at $1,254, followed by the new down trend resistance level. The downtrend resistance is indicated with the arrows within the chart with the first resistance around the $1,285-90 level followed by the original downtrend resistance at $1,330.

Once the short term rally has exhausted itself over the next 1-2 weeks, we could see Gold reverse as it heads back down to $1,212 support. Given its downtrend trajectory and the technicals showing bearish signals, we would most likely see Gold fall below the $1,212 support to the next support level of $1,168 - 70 support level over the medium term.

December Wild Card For Gold

Keep in mind the wild card that is coming up in December is the FED committee meeting, where the market is currently pricing in an over 80% chance of an interest rate rise in December. If this occurs in December its possible that Gold could react similar to last December FED decision. If you recall nearly a year ago Gold spiked  significantly higher reversing the downtrend and beginning a new uptrend.

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The US election results overnight stunned the mainstream media, wall street, world markets and millions of people around the globe. After initially falling sharply on the news, the markets eventually recovered and moved to finish higher as the mood turned from fear to bullishness.

Once the markets saw that Donald Trump moved to the lead early in the election results, the markets around the globe began to panic as the DOW futures was down over 800 points, the S&P 500 futures was down 5%, Gold jumped up over $50 and currencies moved violently as the odds turned to Trump becoming the new President.

Markets 180 Degree Reversal.

Once the S&P 500 futures fell by 5% the index automatically went to limit down, and temporarily stopped trading. Once trading resumed the S&P 500 futures began to slowly climb as the limit down measures meant the index could no longer fall more than the 5% level for the trading day.

Once the S&P 500 began to climb with the DOW, the massive fear that was gripping the markets slowly moved to cautioned optimism as the markets slowly crawled back the losses. By the time Trump was giving his President elect speech early in the morning US time, the DOW had recovered to be down 300 points. By the end of the trading day in the US with the results in for the new President the equity markets swung to a strong gain for the day.

S&P 500

The chart below shows that initially when the markets opened that the S&P 500 fell to the support level of 2125 before slowly climbing during the day for a big swing towards an up day closing at 2163.

Since momentum is now back into the positive and the S&P 500 closed above the 2157 resistance level the next target is 2190 which is back to it's all time highs for the broad US equity index.

US 10 Yr Govt Bond

One of the interesting swings in the markets overnight was in the bond markets. During the initial fear stages of the market the US 10 yr Govt bond yields fell all the way down to 1.70 level as investors moved into bonds bidding up bonds as the selling accelerated out of stock futures.

Like the equities market the bond market began to turn around and swing from a 1.70% yield on the 10 year to as high as 2.09% jumping by 20 basis points by the end of trade. Currently the 10 yr is sitting at 2.005 level.

The previous resistance level which is now support is around the 1.97/98 level, with the next resistance level for the US 10 yr Govt bond at 2.13%.

Lastly you can see that since June of this year that bond yields have been climbing since reaching the low 1.30's level and have broken its downtrend on a daily chart.

Crude Oil

Crude oil had a crazy day after having been down considerably to as low as $43 and change which was also a key support level, to a swing to the green rising to 45.25. Currently in the next day of trading crude is sitting at just over $45.

Crude is currently in a middle ground with no clear direction at the moment. Having said that crude recently broke its long term uptrend which is displayed on the chart by the blue line which is a bearish signal for crude moving forward.

The key areas to look out for in the medium term are $46.25 to the high side and $43.05 on the low side. We would need to see a break out in either direction to determine its next move.

USD/JPY

Currencies around the globe experienced violent moves overnight as the market tried to digest the news that many did not expect to occur within the US election.

The USD/JPY pair fell sharply initially to a low of 101.18, before climbing sharply during yesterday's trade to also climb into the green reaching a high 105.88.

The technical's for this pair has recently turned bullish, after reversing it's long term down trend and clearing the previous resistance level now turned support of 103.88.

Momentum has now moved positive and with the strong reversal intra day the next resistance level for the pair is 106.83. Currently it's sitting at 105.57 at the time of writing this.

EUR/USD

The EUR/USD pair had a similar outcome to the USD/JPY but in the opposite direction. After climbing strongly when news first came out that Trump was in the lead and looking likely to win the election. The EUR/USD pair jumped as high as the 1.13 level which also market the high end of the down trend level for this pair (see chart for trend line).

The currency also reversed course during the day and swung from a strong gain for the day giving up all the gains and falling for the day to reach a low of 1.090 level.

Momentum is only just positive and looks likely to swing back to the negative. The likely next stop for the EUR/USD is down to the next support level of 1.088 as shown in the chart below.

Gold

One thing that the gold bugs had expected was that if Trump would win that Gold would jumped sharply higher.

Unfortunately for Gold investors their prediction did not remain true as the trading day continued. Gold initially jumped spectacularly higher to a high of $1,336 for the day, before giving up practically all the gains to finish around $1,277 level.

Currently in the next day of trading Gold is slightly higher sitting at $1,286 at the time of writing.

Looking ahead for Gold it has 2 key levels to clear before it could regain it's uptrend. Its first resistance level is around the $1,305 - 08 level which it breached intra day but could not close above that level. If it clears this level the next level to close above is its downtrend line shown in the chart. During the highs reached Gold hit its downtrend at around $1,336.

XJO - Aussie Stock Market

Australia was one of the stock markets that was trading as the results were unfolding for the election yesterday. The Aussie market index the XJO was initially up in the morning when the market believed Clinton was winning. It quickly swung to the downside sharply following the US futures market, hitting a low of 5,052 which was around it's strong support level reached back in late June, before recovering considerably by the end of trade yesterday.

Today the XJO has risen sharply on the back of the swing in the US markets to around 5,300 level at the time of writing.

Since the XJO is currently sitting comfortably above its previous support level of 5,190, its next target is around 5,390 - 5395.

Keep in mind though that Momentum is still well in the negative at -142 as well as the current price is sitting below its 50 day moving average. The XJO would need to see buying to continue in the US markets to help lift the XJO out of its current slump.

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Gold fell heavily overnight as it fell over $40 and broke its $1,309 support level and its 10 month uptrend in the process. So its fitting to take a look at where Gold will be heading next.

I recently discussed Gold Click here where I talked about the jump higher on Yellen's hold decision on rates 2 weeks ago. In the article I highlighted the imminent breakout potential higher, as its strong uptrend and bullish indicators pointed to higher prices in the future.

So to see a sudden plunge in price and reversal of its 10 month uptrend in such a short period is interesting.

Starting with the monthly chart below, I have circled in black the break of trend which you can notice has fallen considerably even though its only a few days into the new month.

Based on the monthly chart the first level of support to reach is around $1,205 an ounce or another $62 away from the current price (shown on the chart). Failure to hold that support level there is another initial support level at $1,170.

If the break of the uptrend to the downside is a false breakout, Gold would have to close above $1,350 resistance level to resume its uptrend. So we will have to wait for another 3 weeks or so to confirm the uptrend is broken on monthly chart.

Looking at the daily chart below the magnitude of the fall is relatively large compared to the average daily moves in price.

On the daily chart I have highlighted the first support level at $1,250 an ounce. If Gold is unable to hold the next support level the following support level is around $1,206.

Since Gold fell over $40 in one day it broke below 2 support levels of $1,309 and $1,293 closing at $1,267. So the previous support level of $1,293 is now its first resistance level. Based on the large fall in price, Gold would most likely test its resistance level of $1,293 over the next few trading days.

For Gold to resume its uptrend on daily basis, it would need to close above the $1,340/45 level to signal it a false breakout to the downside. Given the fact that the probability of a rate rise in the US for November and December is rising, Gold will most likely confirm the reversal of its uptrend and head lower.

Finally I have a video from Peter Schiff, who believes the drop in Gold due to the probability of rates rising isn't warranted. He believes rates wont be going higher and if the FED was to raise rates it would be bullish for Gold, just like the rate rise in December 15 was for the precious metal.

Rounding up the video Peter also outlines the end game for the markets from the FED's actions going forward.

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Disclaimer: This post was for educational purposes only, and all the information contained within this post is not to be considered as advice or a recommendation of any kind. If you require advice or assistance please seek a licensed professional who can provide these services.