Global commodity markets continue to be buoyed by regional news headlines and fears of lower supplies, and by the increase in commodity inflation caused by the Federal Reserve’s quantitative easing programs. With regional weather and civil unrest continuing into the month of February, it looks as though global commodity prices will easily hold any tests of support. Market algorithms to look to be set to buy the dips on hard and soft commodities, if they drop down to test support on any given trading day.
Gold bullion trade continues its eight-day sideways hike, having tested 1305 as a solid support area, and having formed a new buy signal with a close above 1330. If the sideways channel can break 1345 going long, the initial target will be 1355, which is the 20 and 100-day simple moving average areas. A subsequent break above 1360 draws in a test of 1380, which is the 50-day simple moving average area.
Silver bullion has completed the signal generated on Friday that went long from 27.20 and hit its target at 28.50 in overnight Monday trade. Traders will now be looking for a long break that holds above 28.50, initially targeting 28.90, and subsequently targeting 29.40, that may complete during the course of this week. Like gold, silver bullion traders have confirmed that solid support is in place at 26.00, although very heavy resistance lies above the 30.00 price point.
West Texas intermediate, the most liquid of all crude oil contracts, has completed the buy signal issued on Friday the broke above 86.5 and hit the 92.00 target in trade on Tuesday. Crude oil now trades in the channel formed during the first two weeks of January, having absorbed a substantial test of support that ran from the 19th through to 28th January. The long side of oil trade has been buoyed not by global demand, but by fears that supply will be impacted with the civil unrest being seen in the Middle Eastern regions. A new long signal on WTI will not be seen with a break above 93.00, but instead will be issued as a consequence of WTI dropping back to test support at 89.80 and subsequently going long from there.
In general, global commodity markets are trading in-line with global headlines the capture fears of commodity inflation and fears of supply disruptions.
Currency markets are once again in the trading patterns that houses most of the days momentum, and price action, in one or 230 min. periods of trade. The dollar index looks weak, and is completing the short signal from Tuesday trade that broke 78.00 the targets 77.30. It is questionable whether regional central banks will allow the Federal Reserve to continue its weak dollar policy, in the face of the administrations long dollar public policy.