Gold, Oil, and the US Dollar

In this world we are faced with an ever changing landscape. Nowhere is it truer as soon as you learn the game, the rules are changed. For instance, we are told that gold is signaling an inflationary future coming for the USA, yet its long term interest rates are below the 4% level and short term rates are basically zero. How can this be? Who would lend money to a nation whose currency depreciates and pays almost no return on its debt?

Nations who depend on consumption from the USA have little choice but to extend credit or face economic contraction in their own economies. And while debt has reached 12% of GDP the foreign support of the dollar and treasuries continues for the United States. But there are changes going on. Most disconcerting is the fact that China has been rolling over its debt from the long term bond to the short term Treasuries, which basically pay zero. While there has been little fanfare over this development, one has to wonder why China would forgo a 2 – 3% rate of return in favor of a zero rate of return on investment. This much we know. They have moved their seat in the theater very close to the exit door.

When your biggest creditor moves his seat that close to the exit and the movie is not even close to intermission, one gets the impression that the film is not pleasing to them. Now it would be one thing if China were a paying customer viewing the film. But they are not here to pay and watch the film. They are here to lend money to the filmmaker to use the money to distribute the film to the consuming audience. Let us hope they stay for the remainder of the story.

There can only be one reason interest rates are so low at a time when the monetary base is so expansive and that is that the central bank policy is to avoid a depression and attempt to jump start the economy. While the lowering of interest rates was a success during the Reagan era, it came at a time when interest rates had just completed a cycle high and inflation had completed its run up from the consequences of the US Dollar coming off the gold standard.

The most recent bank bailouts can best be described at this. Cash was distributed to the banking sector to shore up their balance sheets. Instead of taking this money and lending it to industry, it took that cash and deposited back with the Feds by buying up the Treasury curve. And to understand how the stock market can rise at a time like this is simply the consequence of funds and government insured deposits along with Fed liquidity that is channeled from the banks to the hedge funds where the money is put to work in a speculative manner. This “free” money is creating bubbles in Hong Kong real estate and other Far East markets too.

We’ve arrived at a time when the price of many commodities and other financial instruments trade in direct opposite to the US dollar. This brings us to the realization that many markets are invested in as a short position against the US dollar. What else would explain such phenomena?

In 2009, it did not matter where you invested, as long as you stayed away from the US dollar, you’ve done well.



In Crude Oil, we can see that 2009 has produced a doubling of price. Many analysts are now setting their eyes on the 100 dollar level. However, the most recent breakout in price has not followed thru and instead we have gone thru four weeks of sideways price.



A quick glance at the seasonal chart above shows us why. Crude Oil has just arrived at its weakest seasonal time of the year. The October thru February period on average usually brings lower prices. If we zoom out and look at the chart on a longer term basis, we can see that there is an important band of resistance that exists from the 80-95 dollar area of crude.



When we combine this factor along with technical indicators that are flashing a potential loss of momentum, we can see that the odds of a strong rising crude price over the next few months would warrant caution here. A lot will depend on the strength of the US Dollar, the supply side equation or a geopolitical event to provide impetus for higher price. However, a move above the highs established in October might provide a burst to the 95 dollar area. But beyond that, while we recognize that price always rules, it would seem the seasonal favor sideways to lower prices on average. This is further confirmed when we look at the seasonal aspects of the US Dollar (chart below). The chart is telling in the fact that it shows the US dollar for the most part, spends most of its time sideways to lower. However, the mid November to mid December time frame is one of these exceptions where the US dollar usually bounces higher. Thus over the next month or so, on average, the crude oil market is most likely to trade sideways to lower and the US dollar should incur a bounce.



Bottom line: Crude oil support is the 60-65 area and the 70-72 area based on the moving averages. As long as crude remains above the 72 dollar area, the trend remains up. Should crude oil move above the 83-84 dollar area, then a contra-seasonal rally to the 95 dollar range would be the most likely outcome. Barring a geopolitical event, the crude oil market usually moves lower during this time of year. As long as crude is below the 83-84 area, odds favor lower prices over the next month and potentially into February. Going forward is another story. The lack of planning for an oil emergency in this country could have crippling effects. Can you imagine a crunch during the farming planting season? Since most everything is tied to crude oil prices, it should be on your radar constantly. If peak oil is a truism, there are much higher prices coming in the future for most commodities.

The market that has stolen the spotlight lately is the gold market. While a 20 year bear market went a long way to destroy gold’s image, the first decade of the 21^st century has belonged to gold. From its lows of 250 dollars, gold has now climbed almost 900 dollars higher and sits at a historic price peak relative to the US dollar.

Gold is another market that usually sells off in the October and sometimes November time period. True to its cyclicality, gold peaked on October 13^th and pulled back into month’s end. However, as soon as November arrived, gold did what it has been doing since September, and that’s rally. As soon as the pullbacks begin in gold, contra-seasonal news hits the street and propels gold higher. In September it was the Chinese telling its citizens to buy gold and silver. In October it was India buying gold and we think this most recent rise might be due to the developing story that tungsten is being discovered in gold bars. While some people last week pointed to the fact that this story is not a new one we want to point out that it sometimes takes a bit of time for investors to grasp the big price changing stories. It’s almost like when you hurt yourself really bad. There’s a time delay before the shock or pain really sets in. We suspect that the gold market may be waking up to the fact that all is not right. We are not certain, but it must make some very uneasy.

Whether this is true or not we cannot dismiss the fact that many countries are in the process of calling their gold out of storage and demanding they be returned back to the mother countries. To me, these are signs of uncertainty and fear and not just prudence. Time will tell.



Now if all is well in the gold community, why would countries call their gold out of storage facilities? Can you think of any other reason besides CONCERN? Why would you take your money out of your local bank to store it home? Think for a moment the potential for panic as 400 ounce gold bars get drilled and tungsten is found in the middle. Now this is all speculation on my part, but it is something that bears (no pun intended) watching over the coming weeks.

The one thing that we are not speculating on is the price chart. We can see that there is no doubt that gold has broken out to the upside in very strong fashion. So strong is gold that the overbought readings are their highest since 1981. Over the past few weeks we continue to make new highs at a time when gold should be correcting. Now we are approaching an important price point on the weekly chart which should give us clue as to whether gold will finally produce a pullback. Notice that the weekly chart channel that has been drawn shows a potential price resistance area directly ahead of us. The 1135-1150 area is an area where gold should at least see some type of pullback. We say should because gold has traded above this channel line once before during the peaks of 2008. However, it was also a key resistance in the November timeframe of 2008 and the 2009 February price peak. That we have arrived back at this resistance line a full year later is interesting and from a cyclical standpoint, is suggesting that it could be an important price and time area.



We can see by the gold seasonal chart that November usually has a quick and sharp mid month pullback and a higher price into month’s end. More important is the overall trend for November and December and that is sideways. The 2007 bull market in gold saw a November and December sideways price pattern during its bull run, might we see the same thing this year?

The point we are trying to make is barring a panic up move, the odds that a pullback in gold is due is high. Yet, when a major move is underway in a market, this is always the circumstance. The market just keeps going higher until (or so it seems) those who have been waiting to jump on capitulate and jump on. You probably already know the rest of the story. The market peaks a few days or a week later and a good correction sets in. So what is an investor to do?

In order to avoid making decisions like this, an investor needs to make a decision before these moves have covered so much ground. While it is never easy buying at high prices there are times when price must be perceived differently. Gold is only $300 dollars higher than its 1980 peak. Does that make gold feel cheaper? Even if it doesn’t there is one thing you need to consider.

For gold to have exceeded its 1980 price is a very bullish development for the simple reason that it tells us that demand has returned to this market. This year’s pullback low was the same price area as the 1980 high. Since then, it has rallied almost 300 dollars.

During the last 19 months, gold established a new ceiling, the triple digit 1000 United States dollar area where it would always run into resistance. While gold was a victim of the meltdown of 2008, a closer look at the chart shows that it was a courtesy drop and with the exception of a monthly close of 728 at the height of the crash, gold was the first commodity to bottom, a full 5 months before the stock market, and is the only commodity to establish a post crash high. The fact that China, India, and central banks are buying gold certainly must send chills down the spine of the ponzi scheme dollar printers and the massive short positions in gold. The fundamentals……….and accompanying price charts all seem bullish for gold.
If this is a super bull market it is really just beginning to accelerate.

We are at a point in the gold cycle where entering here can be risky due to the overbought condition of the market and its potential to pullback is a consideration. This is why it is important to first recognize important long term price points like 1000 in gold and to have an entry and exit plan to participate in a market that is moving. The difficulty with not acting when one should is that the average investor wants to buy when prices are low or worse, waits for the pullback that never comes. In a REAL BULL, the pullback doesn’t come. So there are times when major price points are exceeded that entering the market is prudent. The breakout above the highs of March 2007 and subsequent rise higher is developing on a weekly chart and is therefore much more powerful that a daily breakout. Consequently the price ranges expand and the moves also become more pronounced and investors have to make decisions WHEN these breakouts occur, not 100 bucks higher.

Gold has given us clues to its strength by making the 2009 low equal to the 1980 high, and then successfully hurdled 1000 and held. Its first pullback since the rally above 1000 dropped to just under its March 2007 high and since then, the STRONGEST part of the rally has developed.

From a cyclical standpoint and from a price resistance area, this coming week and the 1135-1180 area in gold stand a good chance of providing a peak and 2-6 week pullback. This is the most likely scenario, however, when markets reach this level of momentum, the market can at times ignore all technical factors and just continue higher. For instance, gold demonstrated a few weeks ago that it was not afraid to rally even when the US Dollar was moving higher. These are very bullish developments.

All of these indications seem to suggest that gold is in a major bull market albeit in need of a pullback to take some of the froth out. As far as a “b” wave potential, I am not an Ellot Wave expert, but know enough to be dangerous. My take is this. If gold doesn’t peak here, and moves above 1200, I just can’t see how one could justify this as a bear market wave. Still there are some worrisome factors. Silver, Platinum and gold stocks are well below their highs and GOLD IS ALONE as the one moving higher. This is usually a bearish development in the metals and the only exception would be that gold is in a super bull move.

From an investor standpoint, the key is having a battle plan for your entry and exit tactics. The crude oil and gold markets can provide a nice way to hedge against dollar depreciation, but we must always remember that the geopolitical and demand supply economics must be included in the mix.

Gold’s wild card is it is the currency of last resort. If a global currency meltdown or panic occurs, gold will be the safe haven. On the other side of the equation, is what the ramifications are for gold should the world experience a credit contraction. (Depression). Should one be long GOLD or RICE?

In closing, we think the oil and gold market while still in up trends, are susceptible to seasonal influence here. Gold is currently the market of choice, but should OIL MOVE above that red resistance line, a quick rally to the 95 dollar area could develop fast. As long as oil is below the 84 dollar a barrel area, we think the seasonal favors a pullback. In gold, investors should be looking for a pullback to which they can jump onto in this strong market. We think the upside is limited to the 1135-1185 area over the coming weeks and that a healthy pullback would be good for the gold market.

Whatever direction gold and oil take one needs to be following the overall trends and looking to identify the price areas and times where nice set ups occur so as to enter with the least possible amount of risk to the trade. If that sounds interesting to you, we invite you to stop by our website, kick the tires, and see what tactics we are looking at in the oil and metal markets and suggesting to our readers.

Join my Free Commodity Trading Newsletter: www.TechnicalCommodityTrader.com

A seasonal look at Gold and Oil

Over the course of the past three months, gold has taken the lead from the crude oil market is a normal autumn seasonal pattern. Granted, Oil held up longer than usual and gold rallied longer, but the seasonal trends are still playing.

Let’s look at the gold market first, as it has been front and center. A lot of investors shun gold but a hard look at the commodity market shows that it is one of the lesser volatile commodities. As far as a bubble goes, gold is nowhere near the price appreciations seen in other commodities like copper, sugar, cocoa, orange juice and a host of others.



We can see that price highs are made in the Jan/February time frame on average, but in bull market legs, have been known to extend into the spring. The gold chart below shows that the mid February timeframe established the winter high, made a temporary low at the beginning of May and a secondary low in the July time frame.

On the other end of the spectrum, the September thru December time period is usually where the best appreciation is witnessed. For the most part, this is how gold behaved this year with the exception that the end of September and early November lows were only mild corrections as the bull leg was strong enough to make these seasonal pullbacks just dips on the chart.

In my August 19^th commentary (you can Google it - John Winston gold/oil/copper), I made a case for a bull market rally in gold and targeted the ideal time to begin would be September. Two weeks after that update, gold launched into its best run in quite a while and has become a headline item even in the mainstream press. But what is the outlook going forward ?

Gold has now reached a timeframe where a December pullback is in effect. If things play out a temporary bottom should be seen in mid December or early January and another gold leg up would develop into the early winter. That has been the norm of late. Over the past three years, February has been a pivotal month for price peaks in gold. The seasonal chart above shows that January/February price highs can be important. The stronger the rally, the longer the seasonal extends. The 2007 price peak did not come until the month of May, exceeding the February price peak.

So where are we now in the rally?

First off we can see that the fall rally began right on time at the very beginning of September. We entered the September timeframe with gold just below the 950 area. Seasonal pullbacks occurred at months end in September and October. But the beginning of November bought on a major escalation in price once the 1070 area was taken out on the upside. Here’s what I had to say in our August 19^th report regarding gold:

“Moves above the 975-985 area would greatly favor an upside breakout and moves above the 1075-1100 would be indicative that the next leg of the gold market has begun.”




From a price perspective gold has support at the 1100 dollar area (plus or minus 25 dollars) and at the bottom of our price channel at the 980-1050 area. All technical indicators confirm of gold’s pullback and if the seasonal tendencies continue to play out, gold should provide one more rally as we work our way into the winter months. The 50 day moving average has not been touched since late August and is due for a visit. This is where we get our first number of 1100 (plus or minus 20 dollars).
The lower black channel line is another area of interest on this chart. It has provided price support in each pullback during the 2009 season and is another area where a potential low might develop. We can see it provided the lows in May, July, Aug, and September. This confirms the importance of this channel line. Just under that channel is the 200 day moving average, a level that provided major support during the April timeframe this year. It currently stands at the 979 area. Coincidentally, it was near this area that the latest leg of this rally began. While that area seems far away we need to keep in mind that the current gold rally began over 13 months ago at the $680 price level. A medium term correction after a $540 dollar move wound be a reasonable expectation as well.

There are a few ways one could play it. First, if your short term oriented or looking for a spot to hop on board, the first area we mentioned, the 1075-1125 area (ideally the 50 day moving average) offers a potential opportunity for gold’s price to turn and would be ideal for a short term play and as it turns out, would put price right near the middle of the channel lines. For those looking to enter, one option is to take the first nibble at this first price area, and a secondary position could be taken should gold make it to the bottom of the channel line near the 1000 area. This would give gold two key areas to bottom in and would be less of a risk using this scale in method for new entrants who have been eager to participate.

The second area of interest is the 200 day moving average and the lower black price channel line on the gold chart above. If we add a plus or minus $25 dollars to this area, we would come up with the 950-1000 area where a potential gold bottom could form. Using the example above, this is where one might contemplate a secondary position.

From a technical perspective both of the areas we’ve mentioned is an important price point on the chart using various methods of calculations for price retracement and support areas. If one is trying to build an entry plan into this market the above EXAMPLE is an excellent way for one to plan and execute a simple entry strategy that has more than one entry point as part of the overall plan. I am not advocating you use the above example, but that you have a plan of your own rather than just enter anywhere on an emotional whim.

In order to be successful in the markets there is really only two things one needs to know. How to enter a market and when to exit one is the bottom line when the scores are tallied. If you have an entry plan, and an exit strategy, your chances of success will be much greater.

Gold Outlook

The 13 month old bull market in gold has an incredible $540 dollar run behind it a short time. This is significant when you consider that for all of history, gold was under $700 at one point last October. The best part of the seasonal run on average is behind us. But that is on average. In bull markets, gold has the tendency to run higher in the mid winter to early spring timeframe. The bullish fundamentals and news of nations and central banks buying gold, the short supply in the physical markets, the rumors of physical shortages at the exchanges, the debasement of paper currencies via the printing press, and the “LOSS OF CONFIDENCE” in world government provides a powerful incentive for potential price increases in gold.

What could derail the train?

It seems there is only one thing that has been able to affect the price of gold to the downside and that is the potential of a mass debt default. This observation is based solely on the fact that the 2008 global meltdown had a direct impact to the price of gold and so far, it seems that the Dubai situation has also coincided with a downdraft. That is not to say that investors wouldn’t flock to gold this time either. They very well might. Suffice to say that should further escalation begin to surface in the debt area, one should be aware of the potential implications for gold. On the bullish side, one can say this. Gold has been the only major financial instrument to make NEW highs since the last debt default.

On the upside……….

From a pure chart perspective in this report, the upper channel line on the gold chart at the 1250 area is an area where we should expect a significant resistance area. Should all the bullish fundamentals come into play and the perfect storm develops for gold, then the breakout above the 1250 area will be even more powerful than the one we saw when gold broke above the 1070 area recently and should provide another leg up into mid winter and or early spring.

On the downside………..

We’ve already pointed out the two key areas to watch (near the 50 and 200 day averages and the upper and lower black channel lines on the chart). Odds would favor that one of these two areas will provide a meaningful or at least a trading bottom for gold. A rally back up from the 50 day moving average that fails to exceed the upper black channel line at the 1250 area would leave the door open for more consolidation in gold’s price over the coming month. Failures at the 50 day average might provide impetus for a test of the lower boundaries of the channel.

The bottom line………..

From a seasonal standpoint, odds favor one more push up into mid winter. We feel the key area to watch price action is at the upper end of this channel line. A failure to move above the upper black channel line would provide the peak for this current leg and a correction into the spring would unfold. A move above this line would suggest the next bull move is underway and would prolong the gold rally into a later timeframe in 2010. We feel that the 1250-1325 is the most important price area over the next few months. Short termers should pay attention to the 50 day and longer term investors at the 200 day average and the lower black channel line. For seasonal players, some profits out of GOLD and INTO CRUDE OIL during the FEB/March timeframe is usually the ideal time for crude to take over the lead in price appreciation. And with that said, let’s look at the crude oil market.

In the seasonal chart below, we can see that the main area where crude oil usually bottoms is the FEB/MARCH time frame on Average. I suspect that all the calls for $100 dollar oil over the past few months has been temporarily delayed due to the seasonal tendencies of the crude oil market. Indeed, the current downdraft is playing right along with these aspects. We can see that coming up, there usually is a slight bounce in December to January, and from there, a major low into late winter. In a bull market, crude can and does sometimes bottom in December and the pullback in winter can at times provide a higher low. Purchases at the seasonal bottom have two key liquidation times on average, April/June and/or October/November.
The weakest part of the cycle as we can see is the October thru February timeframe, a timeframe we have now entered. (months are below this chart…contract month above.)


In the Crude oil market, the seasonal tendencies are much more pronounced and to some extent, the timeframes are more consistent.


The chart below of crude shows some interesting seasonal highlights from last year. First and most important is the seasonal low in December, the January bounce, and the final low at the end of February and beginning of March. This was a perfect seasonal move. From there an April move began to pullback, but the bullish action ran it higher into June and crude peaked very late. The seasonal chart calling for a July low was a very short 4 to 6 week affair. However, it did produce the seasonal July low right on time. From that point we rallied right to the end of October and peaked at the 82 dollar area right on the seasonal date for a turn. Since then we have dropped all the way to the 69 dollar area.

The end of December approaches and an initial low is due soon in crude. A look at the chart shows the 65-70 dollar area is a key spot where the 200 day moving average and the current daily trend channel lie. On the technical side, RSI is near the oversold area, and Williams %R is nearing that area as well. A longer term support area is the fat red line just above the 55 area on the chart. Odds suggest that a rally attempt should develop from this 65-70 dollar area. SHOULD OIL MOVE BELOW the 200 day average at$ 65, then the potential for a move below 60 towards the red support line will be a potential area for a late winter bottom.

Look for December or March to provide the lows in crude. March is a great time to trim a few gold profits and funnel them into the crude oil market.





These are interesting times for commodity investors and it is important to be looking at all aspects of the markets. Seasonals are so often overlooked, yet they provide a guideline for what to expect and when to expect it. At our website, we are following the seasonal trends of gold and oil always analyzing the price charts looking for low risk set-up trades and/or entries for our subscribers. We invite you to visit our site and have a look.

If you would like to recive my Free Technical Commodity Trader Reports visit my website: www.TechnicalCommodityTrader.com

Gold, Copper, Crude: A hard look into 2010

Let identify the conditions that occurred in 2009 which will lead forward into an assessment of the 2010 outlook for metals and oil.

As we entered 2009, we had a major asset crash due to the events in toxic debt. In response the Fed initiates major bailout programs. In the loosest monetary policy of modern times, interest rates collapse to a low in late 2009. Look at the interest rate collapse into the end of 2008 on the TBT chart (20 year Inverse Short Bond ETF) As we can see by the chart, today the long term interest rate picture is in a neutral position entering 2010 above the blue downtrend line but above the blue uptrend line. The technical indicators are warning that this current uptrend is losing steam as RSI has turned down and Williams %R is in the process of dropping out of its overbought area (usually a sell signal). This indicator we use has been a good at assisting us to discern where the highs and lows occurred.



The 50 and 200 day averages are converging right where price is. A break above or below the averages with a subsequent penetration of the trend line would set the next interest rate trend in motion. The direction that rates take will influence many of the other markets. A break higher will portent higher rates and lower bond prices for the USA.

• Right around the same time interest rates bottomed last November, the FIRST asset class responds.

Gold bottoms with a November / December spike at the 700 dollar area right when interest rates bottom and takes off on a rally to 1007 in March.



The gold chart displays the massive $540 dollar rally that has transpired over the past 13 months. Not only has gold led all asset classes from the depths of the debt hole, but has been the clear winner of the decade in mounting a rally from $251 dollars to $1227 at the peak. So strong has the rally been that the 200 day moving average was only tested once, during the spring lows of April and May. Even the 50 day moving average went from September to December over 100 days without being revisited until the past few days.

The lows for 2009 were the $865 - $870 area in gold. That pullback low was to exactly the same price as the peak of January 21, 1980 when gold touched $875. From that low in spring, gold rallied away from the 200 day average until it reached a point where price was $250 dollars above the average when it peaked at $1227.

Outlook for Correction

There are three probable places for a price low during this pullback. First is the 50 day moving average at the current price area of $1110. This is one potential price zone where a rally might re-establish itself. Should gold bottom in the 1080-1090 area and solidly move above the 50 day average, gold would stage an assault on the upper trend line where a major channel in which price has bounced off the channel three times over the past 13 months.

The second area is the horizontal channel line drawn off the 2007 and 2008 top. We can see how this area points to the price area where gold broke over 1000 to finally rally into higher triple digit prices. This pullback or test of the breakout area would give us a range of about 1020-1040 in price.

The final area is where the bottom channel line, the small blue downtrend line drawn off the March and June peaks and the 200 day moving average converge in price. That would put the price range at about the 950-990 area and will be the most SOLID PRICE SUPPORT area for gold in which gold would still maintain its upward momentum within this channel. Closes below the 930-950 area during 2010 would suggest that the current credit contraction cycle has the potential to bring down the house one more time like it did in 2008.

We expect gold will bottom at one of these three areas between now and mid January and a rally back up to test or exceed the upper trend channel should develop going into mid winter. Depending on the strength of the next leg up will determine how long the rally is to last. Seasonal charts show that corrections usually develop in the mid-February to early March timeframe on average. We suspect a spring peak will lead to what it usually does, a July/August low. Should gold next rally fail to make new highs and then turn lower under the 50 day average or below the low of this current pullback, the potential to test the lower levels we have listed above will be in play.

Going into 2010, the gold market seems to have had only one nemesis, DEBT DEFAULT. The 2007 high at 1033 occurred right at the beginning of the Lehman default announcement. This most recent pullback began within a week from the Dubai announcement and the announcement itself had a 55 dollar pullback day. It is an area that bears watching. We’ve seen the debt situation go from public, to institutional, to financial, and now with the most recent rumblings, NATIONAL. USA, UK, Spain, Greece, Iceland, Italy, and the list goes on, but you get the idea.

There are those who feel the situation in China is not to be trusted either. The notion that the global economic recovery is not sustainable or at best in serious question is viable as the longer end of the interest rate curve as we saw on the TBT chart has not signaled a new higher trend rate as of yet. Should the recovery falter at a time of massive credit contraction the liquidation of assets both paper and hard cannot be dismissed. Paper will go and depending on the severity of the contraction will depend on how much gold might be affected.

But what does Dr. Copper say?

There are a lot of analysts who look to copper to gauge economic strength. The chart below shows that copper was the next major commodity to bottom when the feds collapsed interest rates. Copper blew away the completion in 2009 by running from $1.25 to $3.25 in a triple digit gain. And look at the chart. It was virtually straight up all year. Most recently however, the price velocity over the past few months suggests of a price that is running out of steam. Copper is virtually unchanged in the past few months.



The price high is also coming at a time price location where the 2008 collapse in price began from. Notice the blue arrow line drawn where a price gap occurred and price never recovered. The fact that price has rallied all the way back to this area and is now showing weakness in its price pattern suggests that Copper also is questioning the viability of this recovery. For certain a correction from this area is the odds favored event. Watch the Williams% R indicator as it is just about to fall out of its overbought range.

From a time and price perspective copper looks ripe for a pullback in early 2010. Should copper drop below the lower blue channel line and below the 280-290 area, odds would favor a pullback to a minimum of the 200 day average at the 260 area with potential to trade lower should the recovery falter in the far east. As long as we remain in the channel copper can climb. Should it break below, odds favor a correction.


Crude Oil

Crude double dipped at the bottom by developing a December low and then a subsequent February seasonal low under the 40 dollar area, which if you recall was near the 1991 Iraq invasion high.



Crude oil is nearing the potential seasonal lows as well. Notice that the current nine straight days drop to under $70 had crude oil at the same price as last June and August. This underscores how important it is to understand not only the trend of markets, but the VELOCITY and STRENGTH of the trends. While it can be said that Crude is almost a double this year that is suggestive that you bought at the bottom. More important is that anyone playing crude since last June who is not a very short term trader has been hard pressed to make a buck. However, its seasonal lows are approaching. As long as oil is above the 59-65 area the uptrend should continue. Any moves down that PRICE AREA anytime but especially by the end of February where the seasonal lows are due would be an excellent opportunity to take a position. The two blue arrows drawn on the chart shows the next key resistance area in crude oil. The 90-110 area should provide the most significant resistance to price in 2010. The current price pattern does not look as bullish as the other commodities, but look for a seasonal low in the coming weeks.

From Year to Year………………….

From the end of last October to mid February, Gold was the place to be. From mid February to mid June Crude was the place to be. From mid June to mid August, copper was the place to be. And since September, it has been Gold, Gold, Gold.
In light of the above paragraph, there are a few ways investors and traders can take advantage of the seasonal tendencies. One is to be overweight the commodity that is in season and the one showing the best strength on the chart. Another is to simply line your portfolio with a mix of these commodities so that each can have their turn providing a lift to the bottom line of your portfolio. And finally for the seasoned trader, take advantage of gold spring selloffs by having some crude plays with those gold profits you take in the winter WHEN the trend changes.

The markets will not be an easy navigating area in 2010. One of the key elements we need to be on guard for is whether the markets will do the opposite of this market, the US dollar.



There has been a potential trend change in the US dollar and some believe will be the “surprise” trade of 2010. Whether that is a correct forecast or not will depend on many variables.

This is where we come in. Over the course of 2010 we will be forever assessing the trends and looking for great chart set-ups to take opportunity by the hand and to brave the adversity coming.

There is a great wisdom that is known by all the great traders and investors and it is this.

“If you do not take advantage of the 4 or 5 good rallies that occur during the year and ride them, then the rest of the market will eventually nibble your profits and account balances away.”

Stop by our website for our Free Gold Trends Trading Analysis

Buy Gold in late summer and Oil in late WinterBuy Gold in late summer and Oil in late Winter

A lot of investment focus for outlook 2010 is geared toward inflation based assets such as gold and oil. What a change from the turn of the last decade when the rage was totally based on paper assets such as stocks, bonds and yes folks, even the US Dollar. Indeed the age of the Dot.Com stocks was the zenith of the paper world.

Right around the time the Nasdaq was peaking at the 5000 area, gold was bottoming at the 250 dollar area and crude oil at the around the 18 dollar per barrel price. How times have changed.



Today the question is not whether gold is a good investment but rather if the correction from December is complete and higher prices are forthcoming?

The chart above of the gold ETF (GLD) shows us the uptrend that the precious metal has been in. It is only investment that has made a post crash 2008 high and it certainly has a lot going for it as we enter this year. Inflation fears, currency crisis, debt default, physical supply, and a fundamental loss of faith in government and the financial systems has brought gold followers and analysts from being shunned at social events to at least tolerated today.

A look at the chart shows that gold is in a long term uptrend and is very reflective of the fundamental developments that are transpiring worldwide. But what about the short term outlook of gold? Has the lows of December provided the next buy opportunity here or is there lower price still lurking in the upcoming month or two? While we are long term bulls, there are a few things on the chart that has our short term attention. Let’s look at a few of the issues.

First off, the arrows on the chart highlight something pretty important when it comes to a volume spike. And that is when they occur the potential for good sized corrections are at their most likely to take place. The past few years and the arrows on the chart confirm that. But more importantly is that when they occur at or near the top of the upper channel line in conjunction with MACD and Money Flow indicators turning down, price has always retreated to the bottom of the channel line before initiating a new sustainable bull market run. Now while that may seem a long way from here, historical precedence argues that it is the most likely course.

The red moving average is the same as the 200 day moving average only it is measured in weeks. Notice how often over the past three years that price has pulled back at or very close to that average. The fact that it is now resting at the same area as the lower channel adds weight to the potential of a correction in gold to reach that area. The fact is that markets do not go long periods of time without testing that all important average. The chance that 2010 will not test the 200 day average is not very high.

How about the money flow indicator at the bottom of the chart? Notice that there has not been ONE PRICE BOTTOM during the last three years that did not have the Money Flow Indicator touching the lower price line at the 20 area when gold’s bottom occurred. This is yet another indicator that has me cautious of calling the all clear for gold over the short term.

How about our MACD indicator? While this indicator has not been as concise at trend picking, we can see that the times MACD was in a downtrend, gold for the most part followed it down. Currently this indicator is on the verge of turning down as well.

While I don’t use technical indicators as my buy and sell tactics, I do like to look at them as coincidental indicators when I am suspect of trend direction. The fact that they are not in bullish mode adds to the concern whether gold has really made a significant bottom. Finally, if we look at all of the major pullbacks in the past few years, we can see that pullbacks usually do not have one straight line down for 4 weeks and then a resumption of the trend. In fact, the shortest ones lasted in the 8 week timeframe and others were much longer.

Since the beginning of the month and year, a nice two week rally has unfolded in Gold running gold up from 1075 to the 1160 area at its peak. As we close out the week, we can see that gold and the 50 day moving average (the blue average line on the chart) are both at the same place in price. For GLD that price is the 110.80 area.

So where does this leave us on the short term?

While we have re-iterated we are long term bullish on gold, our analysis of the conditions on the chart above leaves us in a NEUTRAL position as it relates to the short term. Here’s what we are looking at.



From a short term basis, gold has reached a decision making area. With the exception of November, which was a blow off month for gold, price usually begins a sideways pull back from mid month to end just in time for options expiration and such. Therefore should gold fail to exceed last week’s high in the metal and the ETF, odds will favor that an end of month short term low could develop. From a price perspective, GLD has a gap in price at the 107area and two short term support points (see blue arrows) at 105 and 100. We would expect a pullback to one of those areas depending on the strength and/or weakness that gold exhibits over the next few weeks.

Also on the short term decision plate is how the 10 and 39 day averages are situation right where price and the 50 day average reside as well. This merging of price with the 3 moving averages confirms our neutral stance over the short term. From here we will look to see which way price breaks and will look for a low risk entry when time such an opportunity.

From a medium term perspective and a historic seasonal basis, gold should be closer to the end of this current rally leg than its beginning. Price has more often than not been in its upper range come February over the history of gold. With a 540 dollar rally over the past 14 months, it should stand to reason that the potential for a deeper correction than what we’ve seen is a possibility. If one studies the chart, there is usually a mid-winter sell off in gold. In strong years the rally can extend into the spring but it is not the norm. The point is we should expect a correction at or near this time of year. Rather than guess at its beginnings, we will look to see breaks of the support areas we listed above as increasing the odds of such an event.

With the 200 day average right near 100, a pullback in 2010 towards this area might provide a good set-up entry from a medium term perspective. This has been a solid buying area the past few years with the exception of the 2008 crash. It is a rare year that gold or any market for that matter does not visit this key average. Medium term investors should have cash ready to put to work if such an occasion were to develop. However, there are important considerations and technical work that needs to be done at the time of each test of key support area and one should not just purchase at that price blindly.

When we think about it, there are really only 4-5 good swing trades per year. When price patterns, support areas, technical timing indicators and sentiment all line up, it is then that low risk entries are presented to us. Even a short term trader will notice that the above chart of daily gold only required one or two trades per month for maximum efficiency and profit.

Investors on the other hand who are not worried about the weekly blips but are concerned with the yearly trends should be trimming down their positions this time of year and reducing their exposure, not increasing it in a normal year. Unfortunately, things are anything but normal these days. Regardless of that fact history shows that the best performance from the end of winter into the June timeframe is crude oil.

One look at the seasonal chart below shows that the best time of the year to own crude oil is to plan purchases in mid to late February when the seasonal tendencies of crude produces the best rallies usually. Interestingly enough this is when gold usually takes a back seat to oil in the same timeframe. If an inflation investor is your modus operandi for 2010, a portfolio rebalancing in February might be an interesting tactic to execute. If inflation is a problem, oil will follow gold higher. Indeed, history suggests it outperforms it in the spring.

Over the past week oil has once again closed lower on weakness. The seasonal chart below shows us that is exactly what we should be expecting during this time of the year.



The key now will be putting together a low risk entry in the same manner we described earlier in the article as it relates to gold.



When we place the seasonal chart close to the oil chart we can see the inconsistencies with the seasonal at first glance. However, the most important factor was the late February low was correct in forecasting a great entry price for crude. The seasonal called for a pullback from April to June which did not occur in 2009. However the seasonal shows that the second best time to buy crude is the July time frame on the seasonal. Look how July provided the second best time to buy crude on its chart.

Now we are in a timeframe where crude should become its weakest and if history is with us, should provide a great opportunity mid winter. Here’s where one wants to look at the extent of the coming pullback. We know crude should be weak. There are three key price areas that have produced lows since July. These are the areas that should be watched for a potential winter low.

In summary barring another crash of epic deflationary proportions as a few advocates have surmised, the gold and oil market should continue to provide a bull market status. Those heavy in gold might want to consider a trimming of some of the great gains, and shifting a bit into crude oil come mid winter.

At Commodity Trader our focus and emphasis is always on waiting patiently for low risk set-ups in the metals and the oil markets. Come by and visit our site and check out what we’re specifically recommending.

Forex-U-Turn Bonus Points

How to Get 20 Bonus Points for Forex-U-Turn (Regular Price $99 or 99 Bonus Points)
You need to:

1.register at ForexTradingChoice.com site via registration form on the right sidebar;
2.buy Forex-U-Turn only through this link (otherwise you will not be valid to receive the rebate);
3.register your bought Forex-U-Turn by mailing us at purchase@forextradingchoice.com or via contact us form right after the purchase.
4.bonus points will be available to you for using after Money Back Guarantee from ClickBank expires (after 60 days from purchase date).
After you register your Forex-U-Turn, it will be approved by ForexTradingChoice.com when we will check sale status at ClickBank. You can check if your purchase was approved at My Purchase page.

The National Hurricane Center says a tropical storm developing in the Caribbean has an 80% chance of forming into a tropical cyclone in the next 48 hoNational Hurricane Center says a tropical storm developing in the Caribbean has an 80% chance of forming into a tropical cyclone in the next 48 ho

The national average price for a gallon of regular unleaded gas increased to $2.755, up 0.2 cent from the previous day's $2.753, according AAA.

What's moving the market: The National Hurricane Center said a tropical storm developing in the Caribbean has an 80% chance of forming into a tropical cyclone in the next 48 hours. Investors are concerned that the heavy storm could move into the Gulf of Mexico and interrupt crude production.

Earlier Friday, oil prices were lower and poised for their first weekly declined in three weeks. Renewed concerns on the strength of the economic recovery have pressured prices this week, and investors remained wary.

Worse-than-expected economic news on the housing market and a more cautious sentiment from the Federal Reserve pulled oil prices 1% lower before Friday's turnaround. Investors were also discouraged earlier this week by a surprise build in crude inventories.

What analysts are saying: "The approaching storm in the Gulf is providing the support for oil prices, but I don't think these gains will be sustainable next week," said Mike Fitzpatrick, vice president of energy at MF Global.

Fitzpatrick said fundamentals haven't changed and lackluster economic data will continue to dominate and pressure energy markets.

Myrto Sokou, analyst at Sucden Financial, said investors will be looking for signs of global economic conditions at the G-20 meeting in Toronto this weekend.

"There are quite bearish signs in the global economy that could push crude oil prices lower back to the $70 area, including the recent disappointing economic figures from euro zone and the United States, the big draw down in global equity markets, and high levels of oil inventories worldwide," she said in a research note.

forex simulator trading

How to Use Forex Simulator Trading To Understand About Forex Trading

It is going to be essential for you to understand how to trade in the forex market. Forex simulation trading can be accustomed to help you learn how you can trade. With simulator trading you can understand about the procedures and terms that function in the forex field.
What happens in simulation trading is the fact that you will function having a arranged amount of simulated bucks. You will use these bucks to create simulated trades within the forex area. Because this is all a simulation the money that is used isn’t actual.
A range of different essential terms are employed in Forex Trading. When working having a simulator you are able to learn many various conditions. Between these conditions include the stop reduction, the clearing cost and the limit order. Having a simulator you may also understand how you can read currency pair evaluation research.
All forex trading groups work with their own different software program platforms. With simulation trading you will be able to understand how you can use the system. This is thanks to how you’ll function with simulated money here. Being able to use a simulator platform is critical. It will help to use simulated deals on this type of system.
You will need to make use of the correct methods for your trading requirements so that you can be successful. You can understand about different trading strategies via experience with a simulation. You should work having a simulation and figure out a strategy that may provide you with constant profits. This is so you’ll be successful when really trading about the market.
Forex simulation trading is excellent to utilize when getting into this company. It’ll help you to see how forex trading functions through the use of simulated deals. As a result you are able to physique out how forex trading works and what strategy functions for you personally.
Want to find out more facts on this topic without the fluff? Go to the net’s leading resource on this issue! Click here now