COMMODITY Technical Analysis Report

Posted: March 13, 2014 in Uncategorized

Gold advanced overnight to open at the intraday low of 1360.50/1361.50 following the ongoing crisis in Ukraine. It surged to a high of 1370.50/1371.50 on dollar weakness as yields on 10- year U.S. Treasuries gave back some of last week’s gains. The metal finally closed the day at 1369.50/1370.50.
Gold broke out of its range of the past two weeks, taking out resistance just below 1360, and closing higher at 1370. RSI has turned back to test the 70 level, confirming the bullish move. The next resistance is at 1374, the 76.4% retracement of the move from 1433 to 1182. We are bullish so long as we hold the recent lows in the 1326/27 area.
Silver opened the day only slightly higher at 20.98/21.03. Copper sold off to a three-and-a-half year low on worries about credit troubles in China, which can potentially lead to an oversupply of the metal. This tempered silver’s strength and saw the metal dip to a low of 20.93/20.98 before recovering to a high of 21.39/21.44 on the back of gold. It closed the session at 21.33/21.38.
Silver also closed higher at 21.38. There is a daily downtrend in place since the high on Feb 24th. While it is still possible that the formation since silver’s breakout is a bullish flag, the flag retraced a considerable part of the breakout, which is not ideal. Also there is a pattern of declining RSI. We are currently neutral until silver can make a break out of its current downtrend. Support is at the recent low of 20.61.
The gold-silver ratio is trading lower at 64.11. Uptrend support comes in at 62.58. Resistance is at the 2014 high of 65.37
On the Comex division of the New York Mercantile Exchange, copper futures for May delivery tumbled to a session low of $2.908 a pound, the weakest level since July 2010.
Copper last traded at $2.917 a pound during European morning hours, down 1.2%, or $0.035 cents. The May copper contract lost 2.62%, or $0.079 cents, on Tuesday to settle at $2.952 a pound.
Futures were likely to find support at $2.844 a pound, the low from July 2010 and resistance at $3.057 a pound, the high from March 11.
Investors remained cautious after data released over the weekend showed that Chinese exports fell 18.1% on a year-over-year basis in February, confounding expectations for a 6.8% increase, following a rise of 10.6% in January.
The significant decline in China’s exports led to a deficit of $22.98 billion last month, compared to a surplus of $31.86 billion in January. Analysts had expected a surplus of $14.5 billion in February.
The downbeat data highlighted concerns about slowing growth in the world’s biggest consumer of the industrial metal.
Copper prices plunged to the lowest level since July 2010 on Wednesday, amid ongoing concerns over the health of China’s economy.
On the New York Mercantile Exchange, West Texas Intermediate crude for delivery in April traded at $98.14 a barrel, up 0.15%, after hitting an overnight session low of $97.57 a barrel and a high of $99.63 a barrel.
Brent crude on the ICE futures exchange settled down 0.5%, at $108.02 a barrel on Wednesday.
The U.S. Energy Information Administration said in its weekly report Wednesday that U.S. crude oil inventories rose by 6.2 million barrels in the week ended March 7, well above market expectations for a 2.2-million barrel increase.
Total U.S. crude oil inventories stood at 370 million barrels as of last week.
The report also showed that total motor gasoline inventories decreased by 5.2 million barrels, compared to forecasts for a drop of 2 million barrels, while distillate stockpiles decreased by 533,000 barrels, below expectations for a withdrawal of 867,000 barrels.
Oil prices came under additional pressure on reports that the U.S. plans to release up to 5 million barrels of oil from its Strategic Petroleum Reserves, according to a government source.
Crude oil prices gained in early Asian trade on Thursday, shrugging off bearish data overnight that revealed U.S. stockpiles shot up last week and sent the near-term contract to a one-month low, with the focus now on data from China on industrial output and retail sales.
Technical Levels

GOLD 1353 1336 1379 1388
SILVER 21.07 20.68 21.45 21.83
COPPER 2.9923 2.9586 3.0533 3.1183
CRUDE 97.16 96.33 99.21 101.26

Commodity Contract S2 S1 R1 R2
Global Economic Data

6.00P.M Core Retail Sales m/m 0.0% 0.2% STRONG
6.00P.M Retail Sales m/m -0.4% 0.3% STRONG
6.00P.M Unemployment Claims 323K 334K STRONG

Core Retail Sales m/m

Source Census Bureau (latest release)
Measures Change in the total value of sales at the retail level, excluding automobiles;
Usual Effect Actual > Forecast = Good for currency;
Frequency Released monthly, about 14 days after the month ends;
Next Release Apr 14, 2014
FF Notes Automobile sales account for about 20% of Retail Sales, but they tend to be very volatile and distort the underlying trend. The Core data is therefore thought to be a better gauge of spending trends;
Also Called Retail Sales Ex Autos;

Retail Sales m/m

Source Census Bureau (latest release)
Measures Change in the total value of sales at the retail level;
Usual Effect Actual > Forecast = Good for currency;
Frequency Released monthly, about 14 days after the month ends;
Next Release Apr 14, 2014
FF Notes This is the earliest and broadest look at vital consumer spending data;
Why Traders
It’s the primary gauge of consumer spending, which accounts for the majority of overall economic activity;
Also Called Advance Retail Sales;

Unemployment Claims

Source Department of Labor (latest release)
Measures The number of individuals who filed for unemployment insurance for the first time during the past week;
Usual Effect Actual < Forecast = Good for currency;
Frequency Released weekly, 5 days after the week ends;
Next Release Mar 20, 2014
FF Notes This is the nation’s earliest economic data. The market impact fluctuates from week to week – there tends to be more focus on the release when traders need to diagnose recent developments, or when the reading is at extremes;
Why Traders
Although it’s generally viewed as a lagging indicator, the number of unemployed people is an important signal of overall economic health because consumer spending is highly correlated with labor-market conditions. Unemployment is also a major consideration for those steering the country’s monetary policy;
Also Called Jobless Claims, Initial Claims;

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