| TIME TO SHORT COMMODITIES..? |
| World commodity markets suddenly met a selling avalanche towards later part of March and the nicely bull phase came to an abrupt halt. The Fed rate cut acted as a trigger for most of the major commodities where profit taking selling emerged in big counts to send prices reeling for several days in succession.
The sudden and sharp reversal led to formation of long body bearish candles on the weekly charts of most of the commodities and over the last week we saw some good rallies emerge. This has raised hopes of a revival once again in the markets but my feeling is that we have seen the best of the commodity markets for now and the current pullback rise is a good shorting opportunity. There is considerable bullish overhang in the market and that could well be the reason for the pullback. Additional reason is available in the form of a lack of momentum on the current advance and the fact that prices are now ready to break the nearest support moving average. |
| Among the lot I believe Silver is the weakest as it has shown the least amount of rally and lowest momentum gains. A break below $18 would be a trigger to short this commodity. See Futures chart below. A price around $14 can be looked at across the next several weeks. |
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| Gold is showing a similar picture and a fall below $930 should see a price that will retest and break the previous swing low of $905. A fall below that support would lead to some bigger declines that may last many weeks and months. A price target around $840 is foreseen for the metal. |
| Oil shows a better rally compared to both Gold and silver but still remains a corrective play. It has a good support around $90 and it looks as though it may recede back to those targets once the current rally is done. A signal for this would be once prices close below $103 and head lower. |
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This article is contributed by CHARTMAN.Chartman is a veteran Technical Analyst who has vast experience in capital markets.
He will bring forth his experience and knowledge through interesting articles.The topics covered will range from politcal to world markets to trading psychology and other esoteric topics like derivative markets.
You can reach Chartman at mindtree@chartadvise.com
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