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Silver, Oil Dominate Commodity Momentum

NEW YORK ( -- Global commodity markets continue to be buoyed by regional news headlines and fears of lower supplies, and by the increase in commodity inflation caused by the Federal Reserve's quantitative easing programs. With regional weather and civil unrest continuing into February, it looks as though global commodity prices easily will hold any tests of support.

Market algorithms look set to buy the dips on hard and soft commodities if they drop down to test support on any given trading day.

Gold bullion trade continues its eight-day sideways hike, having tested 1,305 as a solid support area, and having formed a new buy signal with a close above 1330. If the sideways channel can break 1345 going long, the initial target will be 1355, the 20- and 100-day simple moving average areas. A subsequent break above 1360 draws in a test of 1380, which is the 50-day simple moving average area.

Silver bullion has completed the signal generated on Friday that went long from 27.20 and hit its target at 28.50 in overnight Monday trade. Traders will now be looking for a long break that holds above 28.50, initially targeting 28.90, and subsequently targeting 29.40 that may complete during the course of this week. Like gold, silver bullion traders have confirmed that solid support is in place at 26.00, although very heavy resistance lies above the 30.00 price point.

West Texas intermediate, the most liquid of all crude oil contracts, has completed the buy signal issued on Friday, broke above 86.5 and hit the 92.00 target in trade on Tuesday. Crude oil now trades in the channel formed during the first two weeks of January, having absorbed a substantial test of support that ran from Jan. 19 to Jan. 28.

The long side of the oil trade has been buoyed not by global demand but by fears that supply will be impacted with the civil unrest being seen in the Middle Eastern regions. A new long signal on WTI will not be seen with a break above 93.00, but instead will be issued as a consequence of WTI dropping back to test support at 89.80 and subsequently going long from there.
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