-- Posted Monday, 2 July 2007 | Digg This Article

COPPER AND CRUDE OIL -- EXPECTED TRADING RANGE
COPPER SEPT   -- $336.10.00 - $350.50	NYMEX CRUDE OIL  JULY    - $68.20 - $72.00
GENERAL MARKET CONDITIONS
Over the weekend I was meeting my friends who are gold and silver traders in Multi Commodity Exchange of India (MCX). One thing they told me that they were unable to cope with the current volatility in gold and silver. Since all of them are positional traders they incurred losses as they were long in gold and silver. Gold had risen in dollar terms but they did not factor Indian rupee’s appreciation before deciding on their traders as a result despite gold’s rise in US dollar terms gold and silver fell in MCX in April to June quarter. This is the second phase of the commodity Bull Run which primarily began in 2002 and is characterized by greater volatility and consolidation. How come consolidation? Gold near dated futures have been trading in wider $600-$700 over the past one year and silver in wider $963-$1450. Either one should be a day trader or a positional traders. If you keep on switching sides, the probability of loss increases multi fold. How? Intra trader uses strict stop losses equal to two to three percent and does not leave any position open whereas positional traders needs to keep a stop losses of atleast fifteen percent. In Intra day trades losses is limited and one is not at the mercy of next day market semantics. The same trader is a bull in one day and the next day a bear.  Positional traders cannot make such a move. There are various hedging techniques to minimize risk, which also have a cost involved. One has to decide his style of investment (positional or day trades) before investing. If you do not decide then you will only float in the river and will never to able to swim to either shore. This is just yet another reminder of the trading strategy so that losses are minimized. I am writing this as we are getting mails and calls on how to deal with silver long positions. There are lot of investors who are long in MCX silver between INR 19,00 and INR 20,000. Then there is the rollover cost which increases the purchase price.   Copper and silver futures expiry is now over. The Fed meeting is now over. The major event risk is over. This is shortened trading week due to US Independence day holidays. Volumes will reduce in the first half of the week. It will be another volatile week due to June payroll numbers on Friday. The US dollar has been on a steady decline before and after the Fed meeting. Key technical support for the US dollar Index is likely to be tested this week.
COPPER -- SEPTEMBER FUTURE
Copper needs to float over $339.60 to prevent further losses to $331.30 and $327.30. Resistance is at $647 and $351.50. A consolidated break of $351 will result in $360.
NYMEX CRUDE OIL -- JULY FUTURE
Crude oil needs to break $71.25 for $72.67. On the lower side $69.76 is the initial support with $66.80 as the key support.
Happy Profitable Trading
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-- Posted Monday, 2 July 2007 | Digg This Article

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