Talking Points
Commodity Prices Treading Water in Slow Start to Trading Week
Liquidity Drop on UK, US Holidays May See Knee-Jerk Price Action
Commodities are treading water as market holidays in the UK and the US make for a quiet start to the trading week amid low liquidity conditions. While a broadly uneventful day seems to be ahead, investors would be wise to remember that price swings can be amplified by thin markets can in the event of a major dislocation. The window of opportunity for such an outcome is relatively smaller for crude oil and copper because COMEX and NYMEX futures are due to close early (17:15 GMT), but spot gold and silver will remain vulnerable to headline risk and caution seems prudent.
Crude Oil Technical Analysis (WTI)- Prices moved lower as expected after putting in a bearish Dark Cloud Cover candlestick pattern. Sellers are now testing below a horizontal support shelf at 93.84, with a break below that exposing swing lows in the 92.11-19 area. Near-term resistance is at 96.87, marked by a falling trend line set from mid-September 2012.
Daily Chart – Created Using FXCM Marketscope 2.0
Gold Technical Analysis (Spot)- Prices completed a Bullish Engulfing candlestick pattern above support at 1348.97, the 38.2% Fibonacci retracement level, hinting at gains ahead. Initial resistance is at 1402.11, the 23.6% level, with a break above that targeting the 14.6% Fib at 1434.86 and the May 3 high at 1488.00. Alternatively, a move below support eyes the 50% expansion at 1306.02.
Daily Chart – Created Using FXCM Marketscope 2.0
Silver Technical Analysis (Spot)- Prices continue to consolidate above support at 22.03, the 38.2% Fibonacci retracement. A break below that targets the 50% level at 21.17. Near-term resistance is at 23.10, the 23.6% Fib, with a turn back above that eyeing the April 26 high at 24.82.
Daily Chart – Created Using FXCM Marketscope 2.0
Copper Technical Analysis (COMEX E-Mini)- Prices may be carving out a Head and Shoulders (H&S) bottom chart formation. Confirmation is needed on a close above the pattern’s neckline, a barrier reinforced by the 61.8% Fibonacci retracement at 3.388. A break above that initially targets the 76.4% level at 3.469. Near-term support is at 3.256, the 38.2% Fib. If confirmed, the H&S setup implies an upside target at 3.781.
Daily Chart – Created Using FXCM Marketscope 2.0
— Written by Ilya Spivak, Currency Strategist for Dailyfx.com
To contact Ilya, e-mail ispivak@dailyfx.com. Follow Ilya on Twitter at @IlyaSpivak
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Source: Daily fx