Press review - page 130
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The silver markets as you can see went back and forth during the course of the week, essentially doing nothing. The $20 level just above is significant resistance, and as a result we feel that the market will probably still tread water in this general vicinity. However, we think that the market is essentially trying to form some type of a bottom now, and as a result we should go to the $22 level. A break of the top of the weekly range is reason enough to start buying in our opinion. We have no interest in selling until we get below the $19 level.
The light sweet crude markets rose during the week after initially falling down towards the $100 level. The $100 level of course offered enough support to cause the market to bounce and test the 104.50 level, an area that has been resistance previously. Because of this, we feel that the market will more than likely continue to have bullish momentum, and a pullback here should offer a nice buying opportunity. On the other hand, if we break above the 104.50 level right away, we feel that the market would the $105 level, and then ultimately the $110 level. We are bullish of this market longer term anyway, and believe that there is a significant amount of support down to the $100 level without a doubt. It is down in that area that we feel that the most buying pressure would reenter the market, as it would become more of a longer-term bullish move.
Brent
The Brent markets had a back and forth week as well, but testing the $105 level for support significantly, and thereby made a serious attempt to break down. The fact that we could not do so of course makes us more bullish, and we realize that the market heads to the $108 level and find resistance there as well. We need to get over the $108.50 level in order to get overly bullish, and at that point time we feel that the market would head to the $111 area. In that general vicinity, we expect to see a significant amount of resistance, but ultimately believe that the market will break through that barrier. Once that happens, all bets are off and we would suspect Brent would head to the $115 level as it is the next natural large, round, psychologically significant number on the chart. Don’t get us wrong, it’s not that we expect this market to be bullish in a straight line, just that overall and over time, the buyers should win out. Selling therefore isn’t something that we are interested in, at least until we get below the $104 level.
The natural gas markets rose during the course of the week, breaking above the $4.60 handle. That being the case, the market looks as if it is ready to continue going higher, but the question then becomes whether or not we can make a fresh new high. If we can get above there, then the market should continue to go higher. However, if we fail to break above that you will see this market pulled back down. It is a bit disconcerting that the market has shot straight up and hasn’t pulled back significantly yet. Because of that we are suspicious.
The gold markets rose during the course of the week, as you can see on the chart. Having said that, we broke the top of the hammer from the previous session, and we now believe that this market will continue to go higher. Perhaps this could be the beginning of a build up momentum to the upside as the markets did not reach the bottom of the larger consolidation this last time. By breaking the top of the hammer, this suggests that the buyers are starting to come back into play. Because of this, we believe that the momentum will build, and that we will more than likely bust through the $1400 level.
This area leads to the $1500 level as far as I can tell, and as a result we believe that this market will continue to grind higher. That of course is the key phrase there: grind. That being the case, you will have to have the wherewithal to hang onto the trade, but ultimately it does look in fact like we are trying to form some type of bottoming pattern overall. You have a lot of different ways to play goal of course, you could do it with physical metals for that matter. That of course takes all of the leverage out of the position, but you also have the ability to trade gold via the CFD markets.
Ultimately, the $1500 level is probably the real target, and we would fully expect to see this market reach that level given enough time. Of course being positive, it will be a little bit more difficult to hang onto the trade simply because so much in the market has been negative. However, we think that the market will ultimately turn things back around as we are in a longer-term uptrend, regardless what this particular chart looks like. It was just a couple years ago that we were well below $1000 an ounce. That being the case, we believe that the market will ultimately continue higher, especially considering that the US dollar looks a little bit on the soft side these days.
The USD/JPY pair fell hard enough during the week to break down below the bottom of the shooting star and test the 101.50 level. That is the bottom of the reason consolidation area that we’ve been stuck in, so quite frankly we don’t really see much in this chart at the moment. We don’t think any things change, and quite frankly feel that the market is simply biding its time if you will, in order to go higher. After all, when markets go higher, they will often pull back slightly in order to go higher after building momentum.
The uptrend line that strong on the chart shows that we are certainly still bullish, and as a result we feel that the market will continue to find buyers every time we dip. With that being said, we would like to see some type of supportive candle, even if it’s only on the four hour chart in order to continue to go higher in the uptrend. We feel that the market should continue to go to the 103 level again and again, eventually breaking higher to the 105 level.
The 105 level will continue to be resistive, but we feel that the market should find enough momentum to eventually break out above that area, which of course would be very bullish turn of events. We believe that the uptrend is the real deal, and that the interest-rate differential should continue to drive the markets higher given enough time. Ultimately, we think that this is the beginning of a longer-term buy-and-hold type of phase for the USD/JPY, something that we have seen over and over again through the decades. Granted, we always many should dip a little bit lower but it would not surprise us at all to see an uptrend form that last for 3 to 5 years, which is common for this pair as it tends to do well in “risk on” type of marketplaces as the Japanese yen it tends to be considered a safety currency. As long as the Bank of Japan continues to try and devalue the Yen, we’re still bullish.
The USD/CAD pair initially fell during the week, but found enough support to bounce and form a nice-looking hammer this hammer of course is a very bullish sign, and the fact that it is focused on the 1.09 area leads us to believe that the market should continue to go higher given enough time. That being the case, we are bullish of the USD/CAD pair given enough time, as the bullish momentum should continue based upon not only the hammer, but the fact that the hammer formed exactly where did leads us to believe that we are going to continue to consolidate in a market that has been very bullish to begin with. Typically, and these situations consolidation in some been continuation.
The recent action in this marketplace suggests to us that perhaps a rest was needed, and as a result we should continue to go higher, probably testing the 1.12 level which is the top of this rectangle. With that, if we break above the 1.12 level, this market should head to the 1.15 level given enough time. At the end of the day, we believe that the Canadian dollar is in trouble overall, and this hammer of course only suggests the same thing. After all, the Bank of Canada recently suggested that Ray cuts warrant necessarily out of the question, which is the complete opposite with going on in the Federal Reserve. The Federal Reserve is trying to cut back on quantitative easing which of course is bullish for the US dollar.
It is not until we break down below this hammer that we would consider selling, but at the end of the day we believe that the support comes back into play at the 1.07 level, which extends all the way down to the 1.06 handle. With that, we would only be short-term bearish, and then start looking for the supportive candle in order to go higher as we would still be in an uptrend at that point as well. One thing to keep in mind though, you can draw an uptrend line that would touch the bottom of this hammer.
The NZD/USD pair fell after initially rising during the week. However, you can see that we have broken out to the upside at least momentarily, and as a result we feel that the market will continue to go higher, probably aiming for the 0.90 handle given enough time. We do believe that the bullishness is warranted, and in fact will continue to go on as the market continues to build more of a “risk on” type of attitude. With that, we are bullish of the New Zealand dollar, and pullback should represent buying opportunities.
The GBP/USD pair broke higher during the week, but as you can see pulled back to the 1.68 handle. That to us is the area that we need to get above in order to start buying again, as we feel that the market will go to the 1.70 handle without too many issues. However, we also recognize that the 1.65 level is supportive, and as a result we should find a supportive candles down there to start buying as well. We are bullish of the British pound in general.
The EUR/USD pair rose during the week, breaking above the 1.38 level handily. However, we need to get above the 1.3950 level, and for that matter the 1.40 level in order to feel comfortable enough to start buying and holding onto the position. If we do that though, it would break above a downtrend line from the monthly timeframe, which of course would be a massive bullish sign in a market that has been actually in a downtrend since the financial crisis began. Granted, we’ve had long moves up and down, but if you look at the monthly charts, you will see that we are in fact in a downtrend.
Weekend Financial Market Update by the Practical Investor