Commodities Spread Trading July 2010
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A regular Commodities spread trading update by Simon Denham of Capital Spreads. For the latest Commodities spread trading update, click here.
Commodities Spread Betting, 30 Jul 2010
Gold continues to languish around $1170 having found support on its 200 day moving average. However the bulls are a little nervous that any further selling and a move below this support area, currently around $1155, could trigger a more severe correction to the downside.
With so many people long of the precious metal, the recent declines have made bulls sit up and take note so some unwinding might see another push lower.
Technical analysts are also continuing to point out that the breach below the upward trend line is a very ominous sign. Also see today’s Gold Technical Analysis.
Crude continues to mooch below the $80 mark and hasn’t quite enjoyed as much strength as the equity market.
Continued failures below here will bring its long term uptrend into doubt, so bulls of the black stuff will be hoping to see a good GDP number from the US later. A break above the $80 level will pave the way for $80.80 and $81.90.
Commodities Spread Betting, 29 Jul 2010
Gold had one of its quietest days for ages yesterday as traders worried about the possibility of a continuation of Tuesdays falls. In the end, neither a recovery nor a continuation was forthcoming and we ended the day pretty much unchanged.
The Gold bugs seem to be taking some comfort from yesterday. So far in today’s early action and we are back up at $1,167 some $10 above the recent lows. The stability is welcome for the bulls but, as with the bounce last week, we are struggling to regain all the lost ground.
As mentioned yesterday, the support at $1,154/58 remains important and it held...which was nice. To the upside, $1174/76 will probably serve as a target point for day trading bulls.
Oil remains bang in the middle of the current $74-$80 range.
Inventories were far stronger than expected yesterday which may cause some weakness in the front month contract as we approach delivery. For the time being we continue to oscillate in the range and (frankly) it is difficult to see what is likely to cause a definite sea change.
Commodities Spread Betting, 28 Jul 2010
The big mover yesterday was Gold which broke through the massive support at $1,175/78 mentioned yesterday. The reaction was pretty much immediate and the metal slumped to $1,157 at its lows.
The trend line break is quite important to the technical analysis as it might indicate an end to the last two years of acceleration rally. The longer term uptrend support is miles lower than current levels and longs will be concerned if yesterday’s falls get further confirmation today.
Current prices are at $1,162 and we are seeing increasing buying from all sides as our spread betting account holders continue to go along with the bull story. There is a support level at between $1,154 and $1,158 but buyers will be hoping that we return above the aforementioned $1,175/78 in the very short term.
As mentioned earlier this week the repo rates are effectively negative with December Gold almost $2 above spot prices, that might indicate that there are a lot of longs out there.
Crude Oil has suffered in line with the consumer confidence number and the $79/80 resistance has once again proved solid. Longs will be hoping that the pull back is only temporary but the fear out there is that we are just going to repeat the last move higher which petered out at $79.50/80.00 and then fell back to the low $70’s.
Commodities Spread Betting, 27 Jul 2010
The gold spread betting market retraced back (almost exactly) to the major support level (once again) in yesterdays session and has bounced marginally from this point.
The current price of $1,186 will be giving bulls hopes of a buying level as the support is holding but it will also not be dismaying the bears too much either as the bounce from such a major level has not been exactly sparkling.
$1,175/78 remains crucial and should be watched by traders as any breach may be taken very poorly. Whilst we remain above here, though, buyers will continue to pick up positions.
Price Update:
- Brent Crude Oil / UK Oil (Sep) closed yesterday at $77.50
- WTI Nymex / US Oil (Sep) closed yesterday at $78.98
Commodities Spread Betting, 26 Jul 2010
Commodities continue to oscillate over the same old ground with Gold seemingly stuck between $1185 and $1205 as the bull and bear argument waxes and wanes.
Dealers are unlikely to take too much on just at the moment but the weekly charts seem to be indicating that the long term bull trend line has held over the last fortnight and bears must be cautious of a sharp reaction higher.
This said we are still close to the support level and spread betting account holders must beware a failure move to the downside. Longs are now getting ‘negative’ monies on Repo for the Spot price, i.e. spot gold is currently higher than the Futures price. Normally it is lower to compensate for having to pay out now on the spot rather than agreeing to pay in the Future. This is often an indication that there are a lot of ‘weak’ longs out there.
If the price drops below $1175/78 we may get a large number of forced liquidations. Dealers will be watching for a break above $1205 and $1212/14 on the up side and the aforementioned $1175 on the down. In the meantime we are in a range trade situation.
Oil held underneath $80 again but there is little in the way of selling reaction just yet. As with virtually all asset markets we continue to be in a bull phase and it is difficult to expect weaker prices with the UK, US and Euro busily stimulating on the quiet.
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Commodities Spread Betting, 23 Jul 2010
Gold has once again found support and is testing $1200 again after making a brief visit above there yesterday and with the precious metal knocking on resistance’s door, crude is also having a look at $80, just above $79 this morning.
Price Update:
- Brent Crude Oil / UK Oil (Sep) closed yesterday at $77.82
- WTI Nymex / US Oil (Sep) closed yesterday at $79.30
Commodities Spread Betting, 22 Jul 2010
Gold and Oil fell through yesterday’s session but remained well within the recent ranges. Gold now needs to break through $1175 to maintain the current bear move but the pressure to hold above this point is becoming intense.
The ‘hedgies’ are rumoured to be massively long and we are either going to go big for them or smash through on the downside forcing high volume liquidations.
In four months time we will probably know the answer. However, for the moment the only real piece of factual info is that we remain above long term trend support and every time we have hit this weekly trend support line over the last two years we have bounced.
Clients will watch for a close below $1175 as this may be a violent sell trigger but in the meantime most are playing from a long game.
Price Update:
- Brent Crude Oil / UK Oil (Sep) closed yesterday at $75.37
- WTI Nymex / US Oil (Sep) closed yesterday at $76.56
Commodities Spread Betting, 21 Jul 2010
Gold managed to rebound from 2 month lows yesterday in afternoon trade as the US, yet again, came in buying the Yellow Metal. There seems to be an almost inexhaustible number of potential buyers in Gold and it will seemingly take something very aggressive to change the momentum.
Press speculation is still all about $1400 and $2000 as the target levels and with continual structural fears uppermost in investors’ minds it is not surprising that the safe haven status is still projected. This said the rebound has still left us underneath the medium term bull trend line and traders should be aware that the price could almost halve and STILL be bullish.
Oil is continuing to follow the equity market around and so we are up a tad this morning on the back of the index reversal yesterday. We are up in top of the recent range territory though so progress $78/78.50 might be more difficult.
News that China had overtaken the USA on energy consumption did, I believe, come as something of a surprise for markets. The knowledge that their growth rate is still verging on the 10% level bodes ill for supply/demand curve prognosis in the longer term.
Commodities Spread Betting, 20 Jul 2010
Gold has closed below $1186 but aside from an immediate shift lower there was no follow through at all, but neither was there a rebound. If we do not regain the $1186/1189 support soon then bulls may begin to get nervous.
Price Update:
- Brent Crude Oil / UK Oil (Sep) closed yesterday at $75.62
- WTI Nymex / US Oil (Aug) closed yesterday at $76.54
Commodities Spread Betting, 19 Jul 2010
Gold fell dramatically through Friday but ran full into the huge support, both as a price level and on the long term rising bull trend line, at $1186 and stopped.
We are now back up at $1192 and clients are buying everything in sight, as they have been for weeks now. Traders must worry that the world and his dog are long of Gold, but this has been the case for years now and we are still in a definite bullish trend.
Only a breach and close below the aforementioned $1186 price level might be slightly damping on optimism and the rising trend line is now at about $1189 so punters will be keen to see it remain above these two points. On the upside $1196 is minor and $1212/18 more solid resistance.
Price Update:
- Brent Crude Oil / UK Oil (Aug) closed last week at $75.37
- WTI Nymex / US Oil (Aug) closed last week at $76.01
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Risk Warning: Spread betting and CFD trading carry a high level of risk to your capital and you may lose more than your initial investment. Spread betting and CFD trading may not be suitable for all investors. Only speculate with money that you can afford to lose. Please ensure you fully understand the risks involved and seek independent financial advice where necessary.
'Commodities Spread Trading July 2010' by DB, updated 30-Jul-10
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