Charts Show Commodities Bottoming

By Dr. Declan Fallon

The collapse of commodity prices through the latter part of 2008 looks to have stabilised in the first half of 2009. A number of bullish reversal patterns are emerging in commodity price charts which may make them attractive over the coming months.

First up is Gold (GLD). An earlier update had pointed to the breakout from the bull flag but what I had mentioned was the dual reveral head-and-shoulder patterns from which the bull flag consolidation emerged from.

click to enlarge


Whatever your aspirations are for gold it would appear $84.75 support is critical. I have a YourCall for a push to $118.69 with a stop at $84.49.

Oil has emerged from its slump although the contango'd(?) ETF, USO, has only started to show signs of life. A push to $40.27 is a possibility. I have set an YourCall with a target of $39.99 and a stop at $26.89. In reality, when oil hits $70 a barrel it will probably be time to take some profits with USO at whatever price it's trading at.


The base metal ETF, DBB, broke resistance and a triple bottom in March and is shaping a possible cup-and-handle pattern with two resistance levels; one at $14.89 and a second at $15.75. The long term target is $23.50 but it will probably take longer than a year to get there, especially as the economy is showing no signs for a rapid rebound.

Comments

[Zignals:]

Time frames for the Calls were inside a year; GLD has the best chance of making the deadline with Base Metals probably looking at 2 years before challenging the target.

DJF

May 06 11:47 AM

[DONE_SONZ:]

I also picked up some DXO.It looks like the cheapest long way to play oil.If it goes lower,its not exactly exspensive.I prefer the yellow gold,but also a black gold bull long term.

May 06 01:22 PM

[one eye:]

Done: Within a year anything can happen.

Short term, do either of you have a price target for DXO?

May 07 01:42 AM

[DONE_SONZ:]

I will hold DXO for the longer haul.Not sure on the short term.It was about $30 in July 08,but also just became available and ofcourse it was right before the drop in oil got underway.I would guess a much better run the next time oil heads in the direction of triple didgits.

On May 07 01:42 AM one eye wrote:

> Done: Within a year anything can happen.
>
> Short term, do either of you have a price target for DXO?

May 08 02:14 PM