Friday, August 3, 2012
After rallying from mid-June to mid-Jule, the entire grains complex has consolidated gains. Corn (top chart) is using the 10 day EMA as support, while wheat (bottom chart) is probably leading the complex lower; it has broken support and is using the 20 day EMA as technical support. All have MACDs that have given sell signals. I would expect sideways to slightly downward trading for the next week or so (or until we get another adverse weather report). But, given the extent of the drought, I would expect to see prices at this elevated level for the foreseeable future.
The Australian dollar has caught a major safety bid; it has been in an upward sloping channel for the last two months. There are several reasons for this. First, Australia has a higher growth rate than most countries with a AAA credit rating. Second, it has higher interest rates. Third countries and traders are looking to diversify their holdings out of dollars and the euro.
The weekly gold chart is still showing gold trading in a very narrow range. However, notice the MACD has given a but signal. Also not the low volatility reading. Don't expect this reading to stay at this level long.
After breaking an uptrend earlier this year, copper has fallen through the 200 week EMA and been trading right below that level for the last two and a half months. Momentum is weak and money is flowing out of the market. The real key right now is the 42 price level; should that not hold, expect prices to target the lower Bollinger Band.