-- Posted Sunday, 18 December 2011 | | Disqus
Last week, gold, silver, copper and crude oil have all closed below their 200 day moving averages. Technically the 200 day moving average is very important for short term direction in commodities. Over the past few years since 2007 gold and silver have not fallen below the 200 day MA in the period October to March. Last weeks close is significant in this respect. Let’s take a technical view for each of them.
| LTP | % CHG | 3 mth % | YTD % | 52WK HIGH | 52WK LOW | 100 DAY MA | 200 DAY MA |
| | | | | | | | |
COMEX FUTURES | | | | | | | |
GOLD | $1,597.90 | 1.31 | -1.50 | 11.38 | $1,925.10 | $1,321.10 | $1,727.42 | $1,615.38 |
SILVER | $2,967.10 | 1.36 | -1.37 | -4.96 | $4,950.00 | $2,618.50 | $3,548.37 | $3,667.09 |
COPPER | $333.10 | 1.96 | 5.68 | -23.18 | $457.70 | $302.00 | $365.95 | $394.38 |
CRUDE OIL | $93.53 | -0.36 | 18.09 | -0.95 | $115.22 | $75.36 | $90.15 | $95.89 |
The current years return in gold and copper are positive while silver and crude oil have turned negative. As such gold and copper will continue to attract more investment interest than silver in 2012. Crude oil is ever green and the fall in crude oil prices is not sustainable. In fact crude oil’s fall is nothing but a buying opportunity.
Presidential elections in the United States, France and Russia and the dual transition of power at the top of China's Communist Party will add to the uncertainty in 2012. If the 17-nation European single currency is to survive in its current form, its members will have to confront harsh economic adjustments and seismic political reform.
COMEX GOLD FEBRUARY
· 200 day moving average is at $1615.50 while the 400 day MA is at $1459.60. If you take a close look at the chart above, whenever gold prices have fallen below the 200 day MA (blue lines), they have had a significant fall from there but over the past ten years. Gold has not stayed below the 200 day MA for a very long period and has risen thereafter to make new highs.
· Three successive lower closes below the 200 day MA suggest that gold can test the 400 day MA of $1459.60 in the short term as long as it trades below $1615.50.
· A close below the 200 day MA on 31st December 2011 can result in gold prices falling to $1239.50 in January. Although this is a highly unlikely scenario this is the technical view.
· Since oversold conditions exist 14 day RSI at 33, gold can rise temporarily to $1700 in the short term while maintaining the bearish trend.
· Only a daily close over $1615 for four consecutive days will result in a bullish zone.
· Gold is a good investment for a period of three years. One can invest in gold at current prices and on every $50 dip till $1250 for a period of three years. Even in the worst case scenario I do not expect gold prices to fall below $1000. With every fall the risk to return ratio is in favor of the long term buyer.
· Short term traders can buy gold at current prices and on every $30 dip with a stop below the 400 day MA average of $1459.
COMEX SILVER MARCH
- Silver has closed below the 400 day moving average of $3019 for three successive days last week. This suggests that silver prices can fall to $2422 and $2171 in the next three months. The bear trend will be more than justified if silver closes below the 400 day MA of $3019 on 31st December 2011.
- Since oversold conditions exist 14 day RSI at 38, silver can rise temporarily to $3160 and $3300 in the short term while maintaining the bearish trend.
- Only a daily close over $3019 for four consecutive days will result in a bullish zone.
- I have been a silver bull all my life and continue to remain one for the long term. In the short term silver prices can fall between $2100-$2400 before the next leg higher to $5000+ either by the end of 2012 or in the first quarter of 2013. In 2008 silver prices fell to $840 and thereafter had a tough time to break $1150 first and $2000 later. Once these prices were breached silver had an epidemic rise. Silver investing is all about patience. There can weeks and months when silver either consolidates or remains in a bear trend. But when it starts to rise it beats everyone. Silver is like a lazy cheetah which runs only when it needs to live.
- If you are invested in silver then hold on to it and average around $2400 and $2100 for a period of one year.
- New investors wait for some more time and then invest. Its better to invest in a rising market than a falling market. Bottom fishing rarely works.
COMEX COPPER MARCH
- In copper we looking at the 200 week moving average. Copper prices have been able to trade over the 200 week MA of $322.80 and needs to trade over the same for the rest of the year to be in bullish zone and target $367-$396.
- Only a daily close below $322.80 (200 day MA) for four consecutive days will result in a short term bear phase to $295 and $282.10
- In any case copper prices should not fall below the 400 week moving average of $282.14. This is the key long term, support and as long copper prices trade over $282.14 it will rise to $457 once again in $2012.
- Copper prices reflect global economic fundamentals. If copper prices fall below the 400 week average of $282.14 in 2012 then it implies that global economy is in serious doll drums and that falling copper prices should be supported by stock markets plunge.
- Once can invest in copper at current prices in very small amounts and aggressively below $282 for the long term.
- Short term investors wait for a week or two before taking an investment call.
NYMEX CRUDE OIL
- Crude oil has closed below the 200 day moving average for three consecutive days. If you take a close look at the chart above, whenever crude prices have fallen below the 200 day MA (blue lines), they have had a significant fall from there.
- Crude oil prices have had a big crash if and when they have fallen below the 400 day moving averages in the past ten years. So keep a close watch at $88.68 for the rest of the year.
- Since oversold conditions exist 14 day RSI at 40, crude can rise temporarily to $97 and $101 in the short term while maintaining the bearish trend.
- Short term traders use a buy on dips strategy with a stop loss below $85 and if stop loss is hit then sell for $79- and $73.80.
- Long term investors wait and watch.
Disclaimer: Any opinions as to the commentary, market information, and future direction of prices of specific currencies, metals and commodities reflect the views of the individual analyst, In no event shall Insignia Consultants or its employees have any liability for any losses incurred in connection with any decision made, action or inaction taken by any party in reliance upon the information provided in this material; or in any delays, inaccuracies, errors in, or omissions of Information. Nothing in this article is, or should be construed as, investment advice. Prepared By Chintan Karnani. Website www.insigniaconsultants.in
Happy profitable Trading
NOTES TO THE ABOVE REPORT
PLEASE NOTE: HOLDS MEANS HOLDS ON DAILY CLOSING BASIS
PLEASE USE APPROPRIATE STOP LOSSES ON INTRA DAY TRADES TO LIMIT LOSSES.
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APPROPRIATE STOP LOSSES PER LOT IN US DOLLARS ON THE TRADING CALLS GIVEN IN THIS REPORT
COMEX GOLD – $15-$17
COMEX SILVER: $25-$30
COMEX COPPER: $3
NYMEX CRUDE OIL: $0.60
SPOT SILVER: $0.25
SPOT GOLD: $15-$17
THE TIME GIVEN IN THE REPORT IS THE TIME OF COMPLETION OF REPORT
-- Posted Sunday, 18 December 2011 | Digg This Article
| Source: GoldSeek.com
