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Deflation

WTI Near "Support" While Sentiment Still To The DownsideWTI has played out fundamentally, and the fundamentals (along with sentiment) still remain to the downside. Traders love to pick out bottoms by catching falling knifes, and they're usually cut up in the process. On a risk:reward basis, sure WTI may seem like it's at a nice area to buy. Yet, I think it is still to early. Crude will likely find support at the longer-dated support in the low $43's per barrel. While I would suggest opening fresh shorts without a pullback, it still may be early to gobble crude futures. The implications are still apparent. Supplies are still gluttonous, and shale companies are hurting. WBH Energy has become the first casualty of the oil warfare. I expect more to come, particularly Cheniere (idea to come). I have been short since $74, and I wouldn't suggest serious upside unless $53.5 is retaken.
NYMEX:CL1!
by CommoditiesTrader
2
The Euro Is At a Tipping PointThe EURUSD is currently trading in a multi-year demand zone on the weekly chart. Since 2004, the pair has reached this area four times, each resulting in a nice upward trend. On the other hand, if this zone is broken, the pair could freefall. If the euro can muster enough support within this zone (which extends to 1.1685) the pair could see a rather nice pullback to 1.22. Unfortunately, the trend and sentiment may only give enough room to shake the oversold technical in order to move lower. I expect the pair to remain in a downtrend in the near-to-mid-term. I would look to short the EURUSD on a close underneath the demand zone at 1.1680 with targets of 1.1480 and 1.1250. This would be a position trade with a wide stop-loss to accommodate for volatility. Some may wonder why wait until another few hundred pips – why not short now? Well, confirmation of a broken demand zone will help support another leg down for the pair. To break the zone, fundamentals would have to further breakdown, which is help support shorting, too. For those contrarians out there, a short-term bounce is in order. The same support and resistances, as well as the demand zone, seen on the weekly chart are applied to the daily chart. Price action is resting on support and is essentially forming a quad-bottom. Since the contrarian trade is going against the trend, stop-losses and targets must be reasonable and tight. Look for a stop-loss at 1.1775 with an upside target of 1.2025. teachingcurrencytrading.com
Short
by CommoditiesTrader
2
Gold Spikes – Price Action Back in Ascending ChannelGold climbs higher on traders looking for safety, albeit crude, equities, the ECB or Greece. As what was considered a year for the “secular” bull market to continue higher, 2015 is looking to start the year rather tumultuous. In “Gold $1,200 – A Line in the Sand,” gold began to form a descending channel after breaking through the previous ascending channel. I did not put much credence into the descending channel because there were several key support levels layered throughout. They, so far, have held. The two separate channels, interestingly, intersected at $1,204.5 – the 2014 open. Price action has closed above this level, and the geopolitical turmoil have spiked prices to resistance found at $1,224 per toz. Volume continues to show support, trading above the 20-day average. The bearish price action on the daily chart has been waning, and the + DMI bullishly crossed over the – DMI for the first time since late November. In regards to the directional movement indicator (DMI), the price action has been overly bearish since August. If momentum can be sustained, the + DMI would show increasingly positive price action for the yellow metal. The RSI has been ticking upwards after breaking out of the current downtrend. If gold can close above $1,224, look for prices to continue to $1,231 before hitting major resistance at $1,240 per toz. – a key point for gold prices. For more on precious metals, please visit: bullion.directory
COMEX:GC1!Long
by CommoditiesTrader
WTI Consolidates on WeaknessIn my previous analysis "Que 2008," I likened this drop in oil similar to the one we've seen in 2008. This was based on both over leverage in the oil and equity markets, diverging fundamentals and a strengthening dollar throughout 2009 - which brought on deflation. Prices did collapse through $60 as expected, and nobody is willing to cut production to reserve market share. The UAE Energy Minister said $40 oil is quite possible and nothing to worry about within a three-month period. The problem is, whether it's OPEC nations or US shale producers, lower prices will cause ongoing degradation of the sector. US energy CAPEX looks to be reduced significantly (2/3 CAPEX in S&P500), as producers are already cutting jobs, future CAPEX and turning rigs offline - as we seen in 2008. Some have hope that these moves will help position companies for a bounce back. However, I liken that to companies cutting jobs and buying back shares to boost earnings. It doesn't work in the long run. Without demand, oil will remain much lower than previously seen. Limited growth in the US and emerging markets and no growth in Europe is setting the stage for subdued prices. If WTI closes below $53.50 per bbl, I expect technical "trap door" selling, and we could see mid-$40s per bbl. Conversely, a close above $59 could send prices to $65 per bbl in order to re-balance to sharp decline. However, if fundamentals remain weak, support will remain weak.
NYMEX:CL1!
by CommoditiesTrader
Gold breaks 13 year old logarithmic trendline.Is the endgame going to be hyperinflation or deflation? Hyperinflationists took gold to new highs with the onset of super easy money starting with 2003 and broke all time records just shy of 2000 with QE1 and QE2. Despite the speed with which M1 is being created in US, China, Japan, EU and UK (through various QE), monetary velocity is still decreasing in the Western world since the 2008 crisis. Therefore, M2 and M3 which can hardly be inflated in the US through explosive student loans and various subprime junk, are already on a clear path to deflation in Europe. Soon the US and others will follow suit. German Finance Minister Wolfgang Schaeuble says: “ I don’t think ECB monetary policy has the instruments to fight DEFLATION, to be quite frank.” Gold is clever. Gold stopped betting on hyperinflation by 2012 and started betting on deflation against a backdrop of relentless M1 creation to the tune of $85 bn a month by FED. And now they say, they are pulling all that away too... The value of cash is increasing as evidenced by the relentless USD rally which implies that the value of commodities are going to fall, starting with gold and silver. DXY broke 85 resistance and is about to break multi year triangular resistance. This clean trendline break in Gold after 10 months of treading the trendline also clearly argues for deflation and dramatically lower gold prices ahead. Technically, a pullback to 1270/1300 area can be expected before the downtrend resumes.
FX:XAUUSDShort
by Bosphorus_Capital
2