Here comes Santa Claus….and the end of year rally in the equity markets. SPX prices are testing resistance in the 2067.90-79.60 area marked by the 38.2% Fibonacci expansion and the December 5 high. A daily close above this barrier exposes the 50% level at 2098.60. However looking at the negative RSI divergence in the daily webinar here warns of ebbing upside momentum however and just perhaps hints a reversal lower may be in the cards. A move below the 23.6% Fib at 2029.80 targets the 14.6% expansion at 2006.40.
With so few trading days left it is beginning to look like the Euro will finish the year close to the dead lows and in spite of the quite oversold RSI studies I continue to view any rallies up to 1.2887 as sellable. Only a close above this level gives reason for pause and will cause a fundamental rethink of many correlated pairs like USDCHF,USDCAD and NZDUSD too.
With Abe’s re-election in Japan it looks like the path of least resistance for USDJPY and GBPJPY is higher and excitingly I believe I have found a particularly good EA to trade this view. Testing is in its early days however the results are good and I may give this EA a small portion of the trading in a new forex copy account coming in Janaury. This will trade in conjunction with the existing Gold copy account.
I am very tempted to take several contracts of oil and “stuff them under the mattress” at these levels. RSI studies from monthly down to daily continue to indicate deeply oversold technical conditions while fundamentally we all know that the price of getting the stuff out of the ground varies but $75 per barrel is not unreasonable. Production is being cut across the globe setting us up for a global oil shortage in the years to come. So…how low can WTI go? The 2008 lower was circa $32!
My current gold trades have been open for a considerable period of time now. Prices are struggling with downside follow-through after breaking support at the bottom of a rising channel set from early November and again I’ve got that in the webinar here. A break below the 23.6% Fibonacci expansion at 1187.39 exposes the 38.2% level at 1156.00. Alternatively, a turn above the 1205.26-1206.74 area marked by channel floor support-turned-resistance and the 14.6% Fib targets the December 9 high at 1238.13.
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