Indices/Commodities Outlook

 

INDICES/COMMODITIES
S&P Futures 2124 No change in view.  Despite Friday’s slightly upbeat CPI release and Janet Yellen’s optimistic outlook on the economy, the S+P had another choppy but directionless session, below the previous day’s all time high at 2133 level (2130/2123) and leaving the outlook unchanged. Beyond 2133 would open up the way for a run towards the 2150/55 target, where the trend line joining the previous highs will provide some resistance. Further out, the longer term upside target would appear to be the 161.8% projection of 666 (Mar ’09) to 1372 (May ’11) from 1073 (Oct ’11) at 2206. If the index fails at current levels then we are in for further choppy trade and a move back towards/below 2100. At this stage this looks less likely and buying dips towards 2110 again seems to be the plan, but keep stops tight below 2100. Today’s EU/US holidays will mean a dead market so look elsewhere for inspiration.
DJI 18226 Ditto the S+P; the DJI also had a choppy sideways session on Friday (18189/18291), remaining below last week’s 18330 all time high and leaving the outlook unchanged.  The recent positive look of the daily chart appears be topping out, but if wrong, further strength would suggest an eventual move towards 183500/400 and as we said before, the longer term target seems to be the 161.8% projection of 6458 (Mar ’09) to 12871 (May ’11) from 12225 (Oct ’11) at 20495. While the dailies do remain positive, it could be that they are making an early attempt to roll over, so a failure at current levels would see the choppy conditions continue, possibly for another retreat towards 18000. I think this is less likely and that another run to 18300 (and beyond) should not surprise, but it may be slow going. It’s a US holiday so stand aside today.
ASX SPI 5684 The SPI did reach 5700 on Friday (high 5702) as we suspected it might, where it ran out of steam and returned to where it had begun the day, with more choppy action looking likely in the days to come. Another test of 5700 is possible, although doubtful today I think, but above which would run into sellers at 5715 (100 DMA) with a slight chance that it could then eventually return to 5761 (15 May high). Overall though, the choppy trade looks set to continue over the next few days, where downside support would be found at the 100/200 HMA at 5660/50, and below here, at around 5630 and at Thursday’s low of 5614.  Below this looks to be on hold for now, but below 5600  could see a re-test of 5578, below which could potentially revisit the trend low at 5558, which should be good support, this being where the 200 DMA currently sits.
GOLD 1206 Gold is once again unchanged today after another sideways session on Friday (1202/15) and continues to sit just above the 1200 pivot. As with previous sessions, the charts are mixed, so I would not be leaning too heavily in either direction but would tend to mildly favour the downside by the look of the 4 hour charts, where, below 1200 would see bids in the previous 1185/95 congestion area. Certainly, if the dollar does continue to appreciate, Gold is going to find any real upside progress increasingly difficult. The topside again looks limited today by the 100/200 DMAs which appear to be converging over the next few days at around 1215 and should offer decent resistance. If wrong, a topside break would head towards the recent high at 1232.
SILVER 17.13 Silver also had a sideways session on Friday, trading a tight 16.94/17.33 range. The 200 DMA and the 200 HMA, at 17.00/10, will again provide the initial supports, a break of which would see a run towards 16.75 and possibly to 16.45. The topside looks to be a sell on rallies situation, where 17.40/50 will act as resistance, with a SL placed above the trend high, at around 17.80. Given the EU/US holiday today, expect more of the same and stand aside.
OIL(WTI) 59.87 WTI again held within the 58-61 range of the last couple of weeks, topping out at 60.77 before heading slightly lower to finish at 59.90. More of the same could be in store, although a break of the topside, beyond 61.00, could see a run towards 61.75 and possibly towards 62.55, albeit that this looks unlikely in the short term. Back to the downside, which may come into play if the dollar strengthens further, a break of Friday’s 59.33 low would head back towards the previous day’s 58.67 session low. Although unlikely to be seen today, a downside break of 58.00 would find nearby support at 57.85 below which could see a deeper fall towards 56.60 and maybe to 56.00, and below which, there is little to stop it heading to 55.70 and then to 54.70 (38.2% of 42.02/62.55). Overall continue to use 58-61 as a guide.

 

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