Sunday, May 16, 2010
Weekly Fundamental Outlook for Energies and Metals - Cushing
Apart from approving the 110B-euro loan to Greece, the EU and IMF also agreed on a package totaling 750B euro so as to contain sovereign crisis and to arrest the euro's freefall. To facilitate the rescue, ECB said it would 'conduct interventions in the euro area public and private debt securities markets to ensure depth and liquidity in those market segments which are dysfunctional'. A joint action by the ECB, FED, BOE, BOJ, SNB and BOC is also announced. The central banks re-establish temporary U.S. dollar liquidity swap facilities which are designed to help 'improve liquidity conditions in USD funding markets and to prevent the spread of strains to other markets and other financial centers'.
Gold Weekly Technical Outlook Comex Gold (GC)
Gold's up trend extended further last week and reached new record high of 1249.7 before retreating mildly on profit taking. With 4 hours MACD staying below signal line, initial bias is neutral this week and some consolidations might be seen first. However, downside is expected to be contained above 1170 resistance turned support and bring rally resumption. ABove 1249.7 will target 1300 psychological level next. In the bigger picture, the strong break of 1227.5 high indicates that rise from 931.3 has resumed. Such rise is treated as part of the long term up trend and should now target 100% projection of 931.3 to 1227.5 from 1044.5 at 1340 next. On the downside, break of 1170 support turned resistance is needed to be the first sign of topping. Otherwise, outlook will remain bullish. In the long term picture, rise from 681 is treated as resumption of the long term up trend from 1999 low of 253 after interim consolidation from 1033.9 has completed in form of an expanding triangle. Next long term target is 100% projection of 253 to 1033.9 from 681 at 1462 level. We'll hold on to the bullish view as long as 1044.5 key support holds.
Crude Oil Weekly Technical Outlook Nymex Crude Oil (CL)
Crude oil's fall from 87.15 resumed after brief consolidations and dived to as low as 70.83 last week. Short term outlook will remain bearish as lon g as 78.51 resistance holds and we'd expect a test on key support zone of 68.59/69.50 next. On the upside, above 78.51 will indicate that a short term bottom is formed and bring stronger rebound, possibly for a retest on 87.15 high. In the bigger picture, as noted before, 33.20 is viewed as a correction to the whole correction that started at 2008 at 147.27. Such rise might have completed at 87.15 already, ahead of 50% retracement of 147.27 to 33.2 at 90.24. Break of 69.50 support will break the series of higher low pattern from 33.2 and will be an important indication that the trend has reversed. In such case, we'll turn bearish on crude oil and expect the then down trend to target a new low below 33.2. In the long term picture, there is no change in the view that fall from 147.27 is part of the correction to the five wave sequence from 98 low of 10.65. While the rebound from 33.2 was strong, there is no solid evidence that suggest fall 147.27 is completed and we're still preferring the case that rebound from 33.2 is merely a corrective rise only. Having said that, strong resistance should be seen between 76.77/90.24 fibo resistance zone and bring reversal for another low below 33.2 before completing the whole correction from 147.27.
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