Crude Stayed Under Pressure Overnight

Crude Oil continued to stay under pressure in overnight trading on growing concerns over potential trading restrictions in the energy markets. Click here for a better understanding of the perceived problem surrounding oil speculation: CFTC Considers strict limits in energy trading. Snipped from the article:

“The CFTC’s hearings came amid dramatic changes in energy prices and the Obama administration’s call to limit exotic derivatives trading. Oil futures traded on the New York Mercantile Exchange jumped to almost $150 a barrel last year, only to fall back to below $40 this spring before rising again to $70.”

Another snip from the end of the article: ” Steven Strongin, managing director of Goldman Sachs, one of the biggest commodities traders, said last week in a Senate committee hearing that “attempts to regulate volatility have rarely — if ever — succeeded.” “Yet they often have unintended and significant consequences,” said Strongin.”

Crude is now trading at $65.69 down another $1.54 per barrel.

Precious metals are trading lower in sympathy. Silver is $13.65 down 13 cents. Gold is $2.00 lower at $936.00. Palladium slipped $2.00 to $260.00. \Platinum is off $10.00 and trading at $1189.00.

In the currency markets Euro traders seem to be keying off the Oil /Dollar relationship rather than today’s today’s U.S. economic data where Wall Street expects to see weakening in Durable Goods. Durable Goods are the more expensive items we purchase; such as furniture, appliances, and autos. Since they are expensive consumers’ willingness to buy them is closely correlated to their economic outlook and confidence. Wall Street expects to see a .6% decline compared to May’s surprising rise of 1.8%. As for the Euro, it is currently trading down another 35/100ths of U.S cent at $1.4134.

In the stock market the Dow ended with only a marginal decline of 11 points yesterday. The insignificant decline was surprising given the pronounced drop in consumer confidence. This morning the Dow is being called to open 24 points lower on anxiety in advance of this morning’s Durable Goods report. Traders are all but ignoring the freshly announced long term alliance between Microsoft and Yahoo.

In other matters; at 2pm eastern the Fed will release it’s monthly Fed Beige Book which is an anecdotal compilation of business conditions within the 12 Federal Reserve districts. This may cause some added volatility in the final hours of stock trading today.

Resurgance in the Dollar

The metals eased from the morning opening highs to close only a shade higher in New York trading. Traders were quick to move to the sidelines after both the Euro and Oil gave up their gains. A resurgence in the Dollar came on the coat tails of a stronger than expected New Home Sales report which clocked in at 384,000 units. Not only did we get an 11% jump in the number of new homes sold; prices were also solidly higher. As a result the Euro slipped to the current level of $1.4215 down 15/100ths of a cent versus our Greenback.

Metal traders decided to lighten up on positions. Silver finished the day at $14.03 up 16 cents. Gold closed unchanged at $953.00. Palladium closed with a $2.00 gain at 260.00. Platinum closed at $1215.00. up $25.00.

Trading volume was moderate. Crude Oil took it’s cue from the Dollar as well as some negative technical trading commentaries. Crude is presently up a mere 10 cents at $68.16.

Over in the stock market the Dow has also turned negative over nervousness surrounding this week’s large U.S treasury auction along with only mixed corporate earnings results. Last on the Dow 9069 down 23 points.

With today’s positive home sales report behind us; traders will now focus in on tomorrow’s Case Shiller Home Price Index along with a fresh look at Consumer Confidence. In the morning I’ll have the latest estimates along with any overnight global developments.

Traders Focus on Commodities as USD Slides

Gold:

There is a very accurate bullish channel forming on the 4 hour chart, as Gold prices had consecutively appreciated reaching the $940 an ounce price. Currently, as the RSI on the hourly chart is floating above the 50 line and the Slow Stochastic is pointing up, Gold might extend its bullish trend. This might be a great opportunity for forex traders to join a very popular trend.

Analyzing the Market to Your Advantage

It has been said by many experienced traders that Forex is a more volatile market than any of the available options. The theory goes that it is difficult enough to judge a single company’s value at a given time and in the future, just imagine how hard it is to do the same thing with a whole country.

This philosophy takes the point of view that analyzing the Forex market relies on careful reading over a period of time. Some knowledge of world affairs is also advantageous, as it allows you to be aware in advance of the timing of important announcements which can cause market volatility.

Others will treat the Forex market exactly like they would treat any other stock market, and take a more technical approach to analyzing their next step. This is not as simple a process in Forex as it is in the stock market, as the Forex is a 24-hour market, and the data-gathering systems require some modification to work effectively on Forex. Nonetheless, where these methods of technical analysis have been correctly applied, they have proved to be an effective way of making a profit on the Forex market just as their original forms proved on other markets.

While the first method is more of a global, evidence-based approach and the second tends towards techniques and patterns, both have been proven to be successful if correctly applied. It is highly advisable, though, to recognise which one to apply at a given time, as confusion can easily arise around what exactly the data tells you. Pick the method that you require and use the other to supplement it. That is the only way you can confidently operate in the long term.

Support and Resistance – the two key words

To really understand the behavior of a currency on the Forex market it is important to see how it has behaved over a period of time. Taken over the course of a very short space of time, it is possible to make data mean just about anything. This, in turn, means that the data will be almost worthless. Over a longer period of time, however, patterns always seem to assert themselves, and establish a firm basis for predicting the future behavior of a currency price. Among the most important figures that appear in a pattern are the support and resistance points.

The point of “support” for any currency is the price level beneath which a currency never trades – effectively its market “bottom”. Whenever the price reaches this level, it almost always bounces back upwards, and for this reason many people will invest when a currency hits that point. Conversely, the “resistance” point is the traditional high point of a currency price, above which it never trades. If you are looking to cash out, this is a good reference point.

Of course, the old saying “there’s a first time for everything” exists for a reason. There will come a time when a currency breaks its support or resistance levels, and this is seen as hugely important. When a currency does this it will be expected to continue this trend, possibly for an extended period of time. It is therefore a good time to get “in” if it is rising or “out” if it is falling.