Tag: Brent crude

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Rising Dollar suggests lower gold and commodities

The Dollar Index is testing medium-term support at 81.00/81.50. Respect would confirm a healthy primary up-trend. Reversal below the rising trendline is unlikely, but would indicate trend weakness. Another trough above zero on 63-day Twiggs Momentum would strengthen the bull signal.

Dollar Index

* Target calculation: 81 + ( 81 – 78 ) = 84

Gold displays strong buying support above $1500 with four long tails on the weekly chart. Recovery above $1700/ounce would suggest a new primary up-trend, but the rising dollar warns of weakness. Reversal below $1600 would strengthen the bear signal from 63-day Twiggs Momentum declining below zero.

Spot Gold

* Target calculation: 1550 – ( 1800 – 1550 ) = 1300

Brent crude is consolidating after breaking support at $100/barrel. Respect of the new resistance level would warn of another decline, while reversal would test $110.

IPE Brent Afternoon Markers

* Target calculation: 100 – ( 125 – 100 ) = 75

The Nymex WTI Light Crude is similarly consolidating below $85/barrel. Respect of the new resistance level would indicate a decline to $75/76 per barrel.

Nymex WTI Light Crude

The broader CRB Commodities Index found short-term support at 265 as the dollar weakened, but is likely to follow through to long-term support at 250 as the greenback strengthens. 63-Day Twiggs Momentum oscillating below zero warns of a strong down-trend.

CRB Commodities Index

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Stronger dollar, weaker commodities: gold, copper and crude

The US Dollar is in a primary up-trend, the Dollar Index having broken resistance between 81 and 82. Retracement is likely to test the new support level; respect of 81 would confirm a healthy up-trend. Respect of the zero line by 63-day Twiggs Money Flow would likewise strengthen the signal.

US Dollar Index

* Target calculation: 82 + ( 82 – 78 ) = 86

Spot gold is also testing a new support level — this time on the daily chart — after breaking resistance at $1600/ounce. Penetration of the declining trendline suggests that the down-trend is weakening, but 63-day Twiggs Momentum remains firmly below zero. Follow-through above $1640 would strengthen the bull signal — as would recovery of Momentum above zero — but failure of $1600 would re-test $1540.

Spot Gold

* Target calculation: 1550 – ( 1800 – 1550 ) = 1300

Other commodities have reacted negatively to the stronger dollar, suggesting that gold will continue its downward path. Copper is in a clear down-trend, headed for a test of the 2011 low at 6800.

Copper Grade A

Brent crude broke its mid-2011 low at $100/barrel, offering a long-term target of $75*.

ICE Brent Afternoon Markers

* Target calculation: 100 – ( 125 – 100 ) = 75

Nymex WTI Light Crude is similarly headed for a test of long-term support at $75/barrel.

Nymex WTI Light Crude

CRB Commodities Index is similarly headed for a test of support at 250. The peak below zero on 63-day Twiggs Momentum warns of a strong primary down-trend. First, expect retracement to test resistance at 295; respect would confirm the down-trend.

CRB Commodities Index

* Target calculation: 290 – ( 330 – 290 ) = 250

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Crude: Brent and WTI Light

Brent Crude is headed for a test of primary support at $100/barrel. Failure would indicate a long-term decline to $75/barrel*. 63-Day Twiggs Momentum below zero already warns of a primary down-trend.

ICE Brent Afternoon Markers

* Target calculation: 100 – ( 125 – 100 ) = 75

Nymex WTI Crude below $90/barrel, signals a primary down-trend. 63-Day Twiggs Momentum below zero strengthens the signal. Expect a test of the 2011 low at $75/barrel — similar to Brent Crude.

Nymex WTI Light Crude

* Target calculation: 92 – ( 110 – 92 ) = 76

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Crude: Brent and WTI Light

Brent Crude is broke medium-term support at $110/barrel and is headed for a test of the band of primary support between $100 and $103/barrel. Failure would indicate a long-term decline to $75/barrel*. Reversal of 63-day Twiggs Momentum below zero already warns of a primary down-trend.

ICE Brent Afternoon Markers

* Target calculation: 100 – ( 125 – 100 ) = 75

Nymex WTI Light Crude followed through below $90/barrel, signaling a primary down-trend. Reversal of 63-day Twiggs Momentum below zero strengthens the signal. Expect a test of the 2011 low at $75/barrel (similar to Brent Crude).

Nymex WTI Light Crude

* Target calculation: 92 – ( 110 – 92 ) = 76

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Crude: Brent and WTI Light

Nymex WTI Light Crude broke support at $96/barrel, warning of a primary down-trend. Reversal of 63-day Twiggs Momentum below zero strengthens the signal, while follow-through below $93 would confirm.

Nymex WTI Light Crude

* Target calculation: 95 – ( 110 – 95 ) = 80

Brent Crude is testing medium-term support at $110/barrel. Failure would indicate a fall to the primary level at $103. Follow-through below $100 would offer a long-term target of $75/barrel*. Reversal of 63-day Twiggs Momentum below zero would strengthen the bear signal.

ICE Brent Afternoon Markers

* Target calculation: 100 – ( 125 – 100 ) = 75

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Crude oil falls

Both Brent Crude and Nymex Light Crude are falling, with signs that the global economy is slowing and that tensions with Iran are easing. Brent is close to the 61.8% Fibonacci retracement level and a fall below $110/barrel would test primary support at $100. Reversal of 63-day Twiggs Momentum below zero would warn of a primary down-trend — and confirm a European recession. Recovery above $115 remains as likely, however, and would suggest a new primary advance.

ICE Brent Afternoon Markers Weekly Chart

Nymex WTI Light Crude has already penetrated its rising trendline and support at $103/barrel. Reversal of 63-day Twiggs Momentum below zero would strengthen the bear signal. Failure of support at $96 would confirm a primary down-trend — and warn of US recession.

Nymex WTI Light Crude Weekly Chart

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Commodity prices and the S&P 500

The CRB Commodities Index is testing primary support at 295 and respect of the zero line (from below) by 63-day Twiggs Momentum warns of another primary decline. Target for a breakout would be 265*. Divergence between commodities and the S&P 500 suggests that stocks are over-priced, with the Fed doing its best to depress bond yields and pump up stock prices ahead of the November election.

CRB Commodities Index and S&P 500 Index

* Target calculation: 295 – ( 325 – 295 ) = 265

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Commodity and stock prices diverge

We had an interesting discussion last week about the correlation between commodities and stocks. The weekly chart below shows how CRB Commodities Index closely tracks the S&P 500 — except in times of extreme volatility like 2007/2008. We  are now witnessing another divergence, with the CRB headed for a test of primary support at 295 while the S&P 500 strengthens. Does weak demand for commodities indicate that stocks are over-priced as in 2007?  The Fed has been doing its best to depress bond yields, pumping up stock prices ahead of the November election. It is too early to tell what the outcome will be, but we need to monitor this relationship through the year.

CRB Commodities Index v. S&P 500 Index

The divergence between Brent Crude and Nymex Light Crude, from early 2011, continues. Both are in a primary up-trend, however, and breakout above the 2011 Nymex high would threaten the still fragile US recovery, offering a long-term target of $140/barrel. Brent is currently testing medium-term support at $115, but respect of this would also confirm a primary up-trend.

ICE Brent Afternoon Markers v. Nymex WTI Light Crude Weekly Chart

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Crude and commodities

Brent Crude is drifting lower but so far has not seriously tested medium-term support at $115/barrel. Respect would confirm the primary up-trend, offering a target of $135*. Respect of the zero line by 63-day Twiggs Momentum would also strengthen the signal.

ICE Brent Afternoon Markers

* Target calculation: 125 + ( 125 – 115 ) = 135

The broader CRB Commodities Index is headed for a test of primary support at 295. Respect of zero (from below) by 63-Day Twiggs Momentum indicates continuation of the primary down-trend. Breach of primary support would confirm the signal.

CRB Commodities Index

* Target calculation: 295 – ( 325 – 295 ) = 265

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Crude oil and commodities correction

Brent Crude is headed for a test of medium-term support at $115/barrel. Respect would confirm the strong primary up-trend; strengthened if 63-day Twiggs Momentum forms a trough above the zero line. Breakout above $126 would offer a target of $150/barrel*.

ICE Brent Afternoon Markers

* Target calculation: 125 + ( 125 – 100 ) = 150

The broader CRB Commodities Index broke its long-term rising trendline and is headed for a test of primary support at 295 . Failure would signal a decline to 265*. The 63-day Twiggs Momentum peak below the zero line already indicates continuation of the primary down-trend.

CRB Commodities Index

* Target calculation: 295 – ( 325 – 295 ) = 265

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