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Talking Points

Crude oil has stolen headlines once again with WTI briefly dipping below $80.00 at the outset of the week, to its lowest since June 2012. Clear catalysts behind the retreat were somewhat lacking. Yet the enduring global supply glut concerns likely left the commodity vulnerable to a resurfacing of general negative sentiment. Looking ahead; demand side cues from US data may fail to offset these supply side factors, which may limit the scope for a corrective bounce.

Also in the energy space; natural gas slid for its fourth straight session, posting a decline of over 1.5 percent. Inventories data due on Thursday may offer some further guidance to the weather-sensitive commodity. As noted in recent reports anticipation over ample supplies heading in to the US winter may continue to depress prices.

Meanwhile gold witnessed a surprisingly soft session in spite of commensurate declines for its USD counterpart. It is unusual for the pair to trade in the same direction and it would be reasonable to expect a negative correlation to soon return.

This puts upcoming US Durable Goods Orders and Consumer Confidence figures in focus. A surprise reading to the leading indicators may catalyze a knee-jerk reaction from the USD. However, the potential for follow-through may be limited. This is given traders may be reluctant to adopt fresh positioning ahead of the FOMC decision later in the week.

Finally, copper found renewed strength on reports of a potential workers’ strike at the world’s third largest mining facility for the base metal, based in Indonesia. At this stage there is little to indicate the potential duration of the prospective protests. Yet, as the South African platinum miners’ strike proved, the lasting impact of such events is limited. This may leave copper to seek more sustainable guidance from demand side cues.

ECONOMIC EVENTS

WTI Dips Below $80 Handle, Natural Gas Carves Fresh 2014 Low

Source:DailyFX Economic Calendar, Times In GMT

Market Movements (Mon 27 Oct, 2014, Close 5PM EST)

Energy

Open

High

Low

Close

$ Chg.

% Chg

US Oil

81.24

81.24

79.44

80.65

(0.59)

-0.73%

UK Oil

86.23

86.23

84.53

85.36

(0.87)

-1.01%

Natural Gas

3.623

3.639

3.543

3.56

(0.06)

-1.63%

Metals

Open

High

Low

Close

$ Chg.

% Chg

Gold

1,230.36

1,231.90

1,225.11

1,226.28

(4.08)

-0.33%

Silver

17.18

17.22

17.08

17.11

(0.07)

-0.41%

Palladium

779.5

787.1

775.8

784.1

4.60

0.59%

Platinum

1,249.10

1,257.10

1,246.90

1,255.80

6.70

0.54%

Copper

3.037

3.073

3.026

3.058

0.02

0.69%

CRUDE OIL TECHNICAL ANALYSIS

Crude is once again pressing against the critical 80.00 floor after witnessing an intraday recovery. While a Hammer formation has been left in its wake, the bullish signal may find limited follow-through. Recent reversal patterns have been met with a lackluster response from traders. Alongside a core downtrend (descending trendline, 20 SMA, ROC) a daily close below the 80.00 barrier would be required to open the 2012 low near 77.00.

Crude Oil: Awaiting Break Below Psychologically-Significant Barrier

WTI Dips Below $80 Handle, Natural Gas Carves Fresh 2014 Low

Daily Chart - Created Using FXCM Marketscope 2.0

GOLD TECHNICAL ANALYSIS

Gold’s slide below the 1,241 mark has helped confirm an Evening Star formation which may warn of a deeper setback. Trend indicators also appear to be shifting with prices testing the 20 SMA and the ROC prodding at the zero bound. Confluence of the signals would be required to offer a more concrete bearish technical bias.

The DailyFX SpeculativeSentimentIndex suggests a mixed bias for gold based on trader positioning.

Gold: Awaiting Alignment From Short-Term Trend Indicators

WTI Dips Below $80 Handle, Natural Gas Carves Fresh 2014 Low

Daily Chart - Created Using FXCM Marketscope 2.0

SILVER TECHNICAL ANALYSIS

Silver remains in respect of trendline resistance and its retreat under the 17.30 floor has generated an Evening Star pattern. While typically a reversal signal from a preceding uptrend, the formation indicates the bears are unprepared to relinquish their control of the precious metal. This casts the immediate risk lower for a revisit of the 16.70 floor. Traders should be mindful that subdued negative momentum reflected by the ROC indicator suggests a clean descent may be difficult.

Silver: Respect of Trendline Resistance Casts Immediate Risks Lower

WTI Dips Below $80 Handle, Natural Gas Carves Fresh 2014 Low

Daily Chart - Created Using FXCM Marketscope 2.0

COPPER TECHNICAL ANALYSIS

Copper’s wild intraday swings have continued following a bounce from the 3.00/01 floor. Trend indicators are suggesting sentiment is turning positive (20 SMA and ROC). Yet the recent violent impulsive moves leave a clearer directional bias lacking.

Copper: Impulsive Swings Leave Clearer Signals Desired

WTI Dips Below $80 Handle, Natural Gas Carves Fresh 2014 Low

Daily Chart - Created Using FXCM Marketscope 2.0

PALLADIUM TECHNICAL ANALYSIS

Palladium has bound some buying interest renewed at the 775 handle as the 20 SMA turns upwards. While this offers a positive signal some skepticism over a sustained advance is warranted, given recent choppy price action.

Palladium: Awaiting Clearer Directional Guidance

WTI Dips Below $80 Handle, Natural Gas Carves Fresh 2014 Low

Daily Chart - Created Using FXCM Marketscope 2.0

PLATINUM TECHNICAL ANALYSIS

Platinum continues to consolidate within the 1,242 to 1,289 range that has contained the precious metal over the past several weeks. With trend indicators swaying a breakout from the recent trading band would be desired to offer a clearer directional bias.

Platinum: Awaiting Breakout From Narrow Trading Band

WTI Dips Below $80 Handle, Natural Gas Carves Fresh 2014 Low

Daily Chart - Created Using FXCM Marketscope 2.0

Written by David de Ferranti, Currency Analyst, DailyFX

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