A faint light is often all that is cast upon truly outstanding positioning strategies before they ready. Fundamental analysis, awareness of monetary policy developments, positioning conditions and other trend characteristics followed allow candlestick charting analysis to shine needed illumination. Martin B. McGuire
Tuesday, December 2, 2014
Yellow or Black Gold, Which if Either to Believe!
There were dramatic moves in
both Gold and Oil yesterday and both have retraced some of that dramatic move
today.Initially, both looked like
important trend reversals, but there are differences which may point to a more
lasting recovery for one over the other.
The decline in Crude oil
since June has been dramatic. When I
wrote about the crude oil topping pattern (‘Where
to Oil; With Too Many Geopolitical Balls in Air’) 2 days after the contract
high, the 10:1 (reward:risk) objective of the short recommended, though met
within a month, was far from what has eventually been made available.Instead, crude prices fell through the $95
level and hit a low on Monday morning of $63.72 (Jan 2015 future).
The recovery in January
Crude (CLF5) though impressive, was unable to best the ‘mid’ from Friday’s
decline, marked at $69.825.The
settlement fell $0.83 shy of a more meaningful recovery.There is still time for the contract to show
that the decline on Friday was not a precursor to still lower levels, but the
time is running out.A settlement above
$69.825 by tomorrow (Wednesday, Dec 3) in necessary in order to discount the
bearish implications of Friday’s decline.
Looking now to gold, we
would note that Monday’s early plunging prices tested the month old, multi-year
low (May/April 2010).For the January
2015 contract (GCF5), the test held and prices recovered to best the previous
session (Friday) high.The settlement
yesterday was actually well above the prior session high and a ‘bullish
engulfing’ was formed.
To confirm the likely
continued impact from this bullish technical development, a consistent
settlement above $1189.15 through Thursday would help to verify the bullish
implications of this ‘engulfing’ pattern.
Should it prove that oil
stays low while gold firms as possibly suggested by recent technical
developments, it may be that weaker global economic prospects and stronger
supplies of crude will weigh on crude prices despite a relatively strong and
sustainable performance in U.S. economic growth.Additionally, a recovery in gold, highlighted
the nearly 10% advance in CFTC described ‘non-commercial’ net longs in the week
ending last Tuesday, may be supported by domestic U.S. economic developments
and the belief that global deflationary concerns and conditions will
The picture may not be perfectly
clear as yet, but the puzzle pieces are nearly all in place.