Crude futures barreled past $80/bbl and our 3rd tier uptrend line on a surge in volume as the Cable logged large gains and weekly gasoline inventories shrank. Therefore, crude's exciting near-term gains have toppled their latest technical barrier as anticipated after eclipsing our important downtrend lines and the psychological $75/bbl level. Meanwhile, the Dollar's downward trajectory is intact after the Fed's Beige Book confirmed that the central bank has little intention of raising rates in the foreseeable future. Meanwhile, the GBP/USD has leapt past important topside technicals and the EUR/USD is contemplating leaving behind 1.50. Hence, crude's positive correlations are creating an environment supportive of further gains in commodities. Therefore, we presently have little reason to alter our positive trend outlook on crude.
The next key for crude will be the S&P's ability to shrug off disappointing unemployment data and negative psychological headwinds to overcome 1100. Any movement in the S&P futures beyond 1100 would likely result in exciting near-term gains in crude. However, U.S. econ data has been flowing in mixed lately so the S&P futures face an uphill battle. U.S. housing data will have an opportunity to redeem itself tomorrow with an Existing Home Sales Release. Additionally, the EU will release a wave of PMI data along with Britain's Prelim GDP. The EU's PMI numbers will be in focus since an increase in production results in higher demand for and consumption of crude.
Meanwhile, investors should eye the EUR/USD's interaction with 1.50 and gold's struggle with $1050/oz. A break out in either investment vehicle should yield further gains in crude due to the influence of correlations. We can find only find weak technical barriers for crude, including 10/21 highs and the psychological $85/bbl. As for the downside, crude has technical cushions in the form of multiple uptrend lines along with 10/21 and 10/16 lows. Additionally, the psychological $80 and $75/bbl levels are now working in crude's favor.
Resistances: $81.02/bbl, $81.50/bbl, $82/bbl, $85/bbl
Supports: $79.84/bbl, $79.39/bbl, $78.38/bbl, $77.74/bbl
Psychological: $85/bbl, $80/bbl, $75/bbl