Weekly Outlook: 2014, June 29 - July 06

US Dollar Index forecast for the week of June 30, 2014, Technical Analysis

The US Dollar Index fell during the course of the week, but was closing it out just above the 80 handle. The 80 handle is of course supportive, but ultimately we believe that the real support is to be found out of the 79 handle, which a break down below would be massively negative. Right now, it appears that we could very well see a little bit of a pullback, binds we do not see much in the way of long-term trades at the moment. We believe that if you wish to trade the US dollar from a longer-term perspective, you are probably going to be better off trading in the spot Forex market against a particular currency. The dollar index as you can see broke down a little bit during the session on Friday

Silver forecast for the week of June 30, 2014, Technical Analysis

The silver markets rose slightly during the sessions over the past week, but as you can see that $22 level is an area that has caused resistance previously. We need to get above the $22 level in order to start going long but we think ultimately this market wants to close the gap that has resistance of the $27 handle. Pullbacks at this point time should be nice buying opportunities, and with that being the case we feel that the market is essentially “buy only” at this point in time.

Crude Oil forecast for the week of June 30, 2014, Technical Analysis

The light sweet crude market initially gapped higher at the open of the week, but old backwards and fell down to the $105 level. The $105 level offered enough support to keep the market afloat, and being a large, round, psychologically significant number, it makes sense that the buyers would step in there. The real question is whether or not the market can sustain that support long enough to keep going higher. We do believe it will, but we also look at this market as being supported all the way down to roughly the $103.50 level, and the entire area between there in the $105 handle as being a “zone of support.” Because of this, we are looking for some type of supportive candle in that general area in order to start going long. The market is far too aggressively long at this point and well supported to short it, so going forward we are “buy only.”

Brent

The Brent market initially tried to rally during the course of the week, breaking above the $115 level. However, we found enough resistance of there to keep the market down, and formed a negative candle. However, we think that there is a massive amount of support below, so this market should find plenty of support. We will be looking for supportive weekly candles in order to take advantage of an obvious uptrend, and we also recognize that the ascending triangle that broke out above the $110 level is still a major factor in this marketplace.

There are a couple different areas that we are particularly interested in, $112 being the first one, and the $110 level being the other. Any supportive candle around those areas will have is aggressively long, just as a break above the top of the high as that we have recently put in would have us buying. At this moment in time, we see no opportunity to sell this market and believe it will continue to go much higher. By the end of the summer, we would not be surprised see this market hit $120.

Natural Gas forecast for the week of June 30, 2014, Technical Analysis

The natural gas markets fell again during the course of the week, testing the $4.60 level but failing. Ultimately, we did push towards the low of the recent consolidation area, and as a result we now find ourselves in a situation where this market is going to test significant support. The fact that we closed the very bottom of the range of course is very negative looking, but it really is and until we clear below the $4.20 level that we feel confident enough to start selling again. On the other hand, a supportive candle in this general vicinity would lead to more consolidation, and a move up to the $4.80 handle.

It’s quite possible that this market continues to consolidate over the course of the summer, because you have to keep in mind that liquidity is about to drop off as traders go to holiday. On top of that, there are various different things pushing the natural gas markets around, not the least of which is the Russians and the Ukrainian situation. Remember, although the situation is somewhat calm then it once was, the truth is that the Russians are still “warning” the Europeans about reselling natural gas to the Ukraine. As long as there is tension about natural gas delivery and shipment in the European Union, that could provide a little bit of a support base for this market.

On top of that, we have the absolute opposite situation. We are heading into the warm months in North America, meaning natural gas will drop off dramatically. Some people try to use this as an alternate energy play, as petroleum prices rise making natural gas prices more agreeable for power production. However, it should be noted that the switchover process is in an overnight thing, and as a result that is simply going to be short-term ebb and flow type of moves. Ultimately, natural gas should find itself in some type range, the question then becomes whether or not it is the one it was in previously, or one below current levels.

Gold forecast for the week of June 30, 2014, Technical Analysis

The gold markets had a slightly positive week over the last five sessions, but that being the case the market continues to look a bit ported. Nonetheless, we believe that this market should eventually go higher, and head to the $1400 level. In fact, it’s possible that we may be forming an inverted head and shoulders, suggesting that we could go even higher than that. With this being the case, we are bullish of this market and believe that it will ultimately continue higher into a nice uptrend.

With the most recent GDP numbers coming out of the United States revised much lower, it’s very possible that the market will continue to sell off the US dollar and head into precious metals such as gold. It’s very possible that the Federal Reserve may have to taper off of quantitative easing even slower than anticipated, and that of course means that the market will have to adjust for interest rate expectations.

Ultimately, the market should continue to find lots of choppiness between here and the $1400 level, and if we can get above that $1400 level, this should be a nice buy-and-hold type of situation sending this market as high as $1800 over the longer term. Pullbacks should continue to offer buying opportunities going forward, and as a result we would be looking at different buying opportunities with anticipation. We have no interest in selling this market, and believe that there should be plenty of pullbacks going forward that should continue to bring in buyers looking for value. We believe that it’s likely that the $1200 level is the “floor” in this market, and that the market will go below there again. After all, the $1200 is a massive support level on the longer-term charts, and as a result we think that the gold markets will be much higher than current levels by the end of the year. We also believe that so-called “smart money” is starting to enter the market, and take advantage of cheap prices in a market that has been oversold for some time.

USD/JPY forecast for the week of June 30, 2014, Technical Analysis

The USD/JPY pair fell during the majority of the week, testing the 101 region. There is a significant amount of support just above that number, so we would look for some type of supportive candle in order to start buying, but quite frankly we do not see the ability to trade this market for any real length of time, so we believe that short-term traders will be attractive this market while long-term traders will stay away. On a move above the 103 level however, that would be very enticing for longer-term traders, sending this market to the 105 level.

USD/CAD forecast for the week of June 30, 2014, Technical Analysis

The USD/CAD pair fell during the course of the week, and in fact close that the very bottom of the range. This of course is a very negative sign, and with that it appears this market is really struggling to find buyers. It does make sense, as the oil markets look rather well supported, and of course the Canadian dollar is highly leveraged to whether the oil markets do well or poor. As Canada exports so much oil to the United States, it also makes sense that flow of money across the border will highly influence with this market does.

However, one of the things that do not paid attention to is that the United States is producing more and more oil these days. Because of that, the correlation isn’t quite as strong as it once was, and with that we have seen the oil and the Canadian dollar markets diverge from time to time. Because of this, what we are about to write could actually be possible.

If we get a supportive candle below, we would be interested in going long, as the trend line that appears on the chart is rather significant. On top of that, the 1.06 level is rather supportive from a horizontal standpoint as well. We can also see the oil markets continue to go higher at the same time that the US dollar does. This is a bit counterintuitive, but support is support, and has to be respected if it comes back into play.

We find supportive action in this area, we could very easily see this market go back to the 1.10 level, where there is a significant amount of resistance. A break above there of course since the market much higher, and it’s very possible that the market could it grind its way higher from there. On the other hand, if we do break down below the 1.06 level, we feel that this market is probably heading back down towards parity. With this, we will be very interested in what happens with the weekly candle this week.

NZD/USD forecast for the week of June 30, 2014, Technical Analysis

The NZD/USD pair initially try to fall during the course of the week, but found enough support to push the market higher, testing the 0.88 level. That area getting broken to the upside send this market looking to the 0.90 as the next target, and as a result we believe that the New Zealand dollar should continue to go much higher. We believe that pullbacks will be buying opportunities going forward, and that a “floor” in this market can be found at the 0.85 handle, extending all the way down to the 0.84 level.

GBP/USD forecast for the week of June 30, 2014, Technical Analysis

The GBP/USD pair broke down a little bit during the course of the week, but as you can see the 1.70 level has in fact offered enough support to form a hammer now, and that of course suggests that the market is going higher. We are very bullish of the British pound as the British economy seems to be coming out of recession, and that the Federal Reserve seems to be having struggles as far as tapering off of quantitative easing in the future. Nonetheless, we believe that the market does continue to go higher, aiming for the 1.75 level.

EUR/USD forecast for the week of June 30, 2014, Technical Analysis

The EUR/USD pair broke higher during the course of the week, but still remains stuck in the consolidation area we have been in for several weeks now. It is not until we get above the 1.37 level of that we feel comfortable buying this market on more of a longer-term move. A break down below the 1.35 level since this market much lower, probably looking for the 1.33 handle, or perhaps even as low as the 1.31 level. In the meantime, we think this market going to be a little bit tight for longer-term traders to be involved in.