24-Mar-2020

1) Gold Bulls Back In Control
2) Crude Oil Could Reach 27.20
3) FTSE Jumps As Mood Improves But PMIs Could Hit Hard

1) Gold Bulls Back In Control

Gold has really calmed down as we hover above very strong longer term Fibonacci support at 1453/50. Obviously this is key to direction.

We have rocketed from this level. Perhaps now the panic selling to cover margins in stock markets has abated, the focus will return to gold as a safe haven/inflation hedge. We are through strong resistance at 1510/12 & strong resistance at 1547/49 to the next target of 1573/78 as I write.

Gold bulls back in control after some base building at very strong longer term Fibonacci support at 1453/50. I think it is worth buying in to weakness or buying above resistance now. A break above minor resistance at 1573/78 targets 1583/84, 1591/93 & minor resistance at 1595/97 for some profit taking.

Support for buying opportunities are at 1561/60 with better support at 1549/47. Stop below 1443.

Silver beats strong resistance at 1340/50 to target 1390/99 then strong resistance at 1445/55.

First support at 1350/45 could hold the downside but below here targets 1290/80.

2) Crude Oil Could Reach 27.20

WTI Crude probably establishing a sideways trading range, which is likely to be a base building exercise in the days ahead. We wrote: Gains are likely to be limited with bears in control but a bounce targets 2240/60, 2295/2305 & perhaps as far as 2335/45. Unlikely but a break higher meets resistance at 2420/50.

WTI Crude meets resistance at 2520/40 & 2580/2620 but could reach as far as 2700/2720 where we watch for a high for the day. Further gains meet strong resistance again at 2780/2800. Might be worth scaling in to shorts across these 2 levels. Stop above the last swing higher at 2850.

The 2450/00 level is important today. Holding below here is more negative, targeting 2380/60, 2330/10, perhaps as far as 2275/55. Expect support at 2200/2180 (& the downside should be limited if we are establishing a sideways trend as I expect). However further losses risks a retest of the May contract low at 2070/50. Below $20 targets 1980/70 & 1925/15. Obviously it’s risky to be short the closer we get to zero, but below here look for 1890 & 1860/50. The 2002 low is 1800/1785.

3) FTSE Jumps As Mood Improves But PMIs Could Hit Hard

European stocks are bounding higher on Tuesday, as the mood in the market improves. The number of deaths in Italy from coronavirus dipped for a second straight day, fuelling hopes that the devastating outbreak may have peaked there. The government announced a death toll of 602, down from 651 on Sunday and 793 on Saturday.

The data is providing a glimmer of hope that the unprecedented national lock down, imposed two weeks ago is at last having an effect. The news comes as Boris Johnson finally put the UK into lock down last night and as the number of deaths in Spain jumps 32%.

Whilst it is definitely far too early to try to call the bottom there are certain factors that trades will be watching for. These include signs of each country peaking, sufficient monetary and fiscal support to prevent the collapse of the economy and of course any signs of a vaccination.

The improved mood also came after the Fed unleashed unlimited quantitative easing and as there are signs of progress in Washington towards the agreement of a $2 trillion rescue program.

However, this improved mood could be shattered by the release of PMI data. Expectations are for manufacturing and service sector UK PMI’s to fall sharply to 45 and 45.1 respectively, down from 51.7 and 53. Even if the data did come in better than forecast, which is unlikely, the revision will be significantly worse after the UK goes into lockdown.