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
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.
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 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.
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