Commodity Updates

In my last update on gold I have mentioned that Gold was trading in no man’s zone. Although I also expected that Gold will resume its uptrend (mainly due to LTRO II) but it did not happen. Gold had clearly faced resistance at the trend line and now it had clearly broken below the support zone.

Gold Weekly chart

In the second chart we can see the retracement levels for Gold. The first retracement for gold is at 1627 and today the level has been broken. The second retracement level for gold is at around 1450 and 50% retracement level for gold is at 1330 levels.

Gold weekly chart with retracement levels

Similarly if we look at yearly chart of gold we can see that the current support is at around 1270 – 1320 levels.  Since open low for this year for gold is at 1554 level, If gold breaks below this level it will witness a steep correction to 1320 levels. I would bet that the probability of this happening is 70% - 75%

Gold Yearly chart

The next chart is weekly chart of copper. Copper is forming a massive distribution pattern of Head and Shoulder. The neck line of this pattern is at around 300 levels.  Once copper breaks below 300 the target would be 200. Copper also serves as a barometer for industrial production, Chinese economy and global economy. If Copper prices will collapse that will indicate impending slow down in global growth which means global stocks will also correct.



Copper Weekly chart



The next chart is the yearly chart of copper. This chart shows that the trend line support for copper is at around 200 which should be the logical target for copper.



Copper yearly chart



The next chart is of NYMEX crude. Crude is one of the weakest commodity chart inspite of steep run off in prices. The current year is forming a doji pattern which may change by the year end. The trend line support for Crude is at around 50. Both copper and crude are indicating that there is going to be an impending slowdown in Equity markets.

Crude Monthly chart

The next Chart is of INR. We may feel overwhelmed by the current depreciation in INR but if we look at the long term chart of INR depreciating INR is a norm rather than exception. In 1984 INR was trading at around 8 per USD and depreciated to 49 by 1998.  As we can see that the consolidation since then was just a time correction and price correction in INR was limited upto 23.6% retracement as evident form chart.

Now since INR is again trading near trend line and Indian macro picture is highly unfavorable for a currency appreciation (If INR breaks this trend line then it should appreciate substantially against USD which seems highly unlikely) I will assume that trend of depreciating INR will continue and it will depreciate steeply in coming months. 

INR Quarterly chart

 

The last chart is the weekly chart of INR. INR is forming a bearish formation and if it trades above 55 -56 level we will see 65 on charts in matter of few months.

INR weekly Chart