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Trading Outlook - Crude Oil Spill to Continue; DAX, S&P 500 Supported

Trading Outlook - Crude Oil Spill to Continue; DAX, S&P 500 Supported

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The hard tank in crude oil has halted for the moment, but only looks like it is resting before seeing a resumption lower. The grind sideways since December saw large speculators bring their long holdings up to record levels, and with that there is still plenty of supply (sellers) left to push oil lower. The weekly bar was a dagger – momentum set to beget momentum. The next level we are looking to is around 47, but the low 40s look like an area which could be visited before a meaningful bounce commences.

Precious metals found a bit of support on Friday following the weak US dollar response to the U.S. jobs report, but overall still look very heavy. Gold can’t seem to find much of a bid here, but does have room up to 1217-ish before finding resistance. Silver is already finding resistance in the low 17s, an area which will be difficult to overcome. A time correction looks under way.

Copper is falling down out of a head-and-shoulders formation, path of least resistance lower looks likely to resume once the current bounce runs out of steam.

The DAX is holding on to trend-line support and continues to further develop an ascending wedge. As long as trend support holds it is difficult to be anything but neutral to bullish. A break though could spark a sharp sell-off as longs are caught on their heels. The same can be said regarding the S&P 500 and important trend support. The Nikkei is in a consolidation pattern (wedge) and looks poised to break higher towards 20k as long as risk sentiment on a global basis doesn’t sour. All of the Japanese index’s gains for the year came on the first day of trade, so it’s definitely a laggard looking to play catch-up. The FTSE 100 is underpinned by a weak pound, but in looking at the index by itself, it has a sequence of higher lows and higher highs on the daily which will be tough to fight.

For full technical considerations, please see the video above.

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---Written by Paul Robinson, Market Analyst

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.