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Overbought Conditions Limit Gains
Commodity and stock prices are expected to continue to see support from investors demanded higher yields although short-term overbought conditions may limit upside action, says Brewer Futures Group. Catch Brewer Futures, and TheLFB trade team on ForexTV Live.
Traders are citing the stronger global economy and low interest rates in the U.S as two reasons for the renewed interest in higher yielding assets.
U.S. stock indices continued its surge to the upside overnight on the heels of higher equity markets in Asia and Europe.
Despite the stronger demand for higher yielding assets, U.S. Treasury Bonds and T-Notes are trading higher overnight. A support base is being built in the March Treasury Bonds which indicates that a value zone may have been reached. A trade through the last main top at 115’29 will turn the main trend to up and indicate further upside potential. A minor bottom has been reached in the March Treasury Notes which could launch a retracement to 116’24.
The weaker Dollar is helping to support February Gold. The main trend turned up on the daily chart, putting this market on path for a potential retracement to $1151.30 to $1169.30 over the near term.
March Crude Oil traded higher overnight. One-by-one a series of tops is being taken out. These tops include 81.52 and 82.30. The next two upside targets are 82.81 and 83.60. Stronger manufacturing numbers are triggering expectations for a rise in demand for oil products.
The U.S. Dollar continued its New Year slide as investors sought higher risk assets. Overnight an index representing a trade weighted basket of currencies turned it main trend down on the daily chart on a trade through 77.32. The chart pattern now suggests a correction to 76.31 to 75.80 is imminent. This move would represent a normal retracement of the entire 74.17 to 78.45 rally.
The March Euro continues to show strength. The current chart pattern suggests a move to 1.4680 is likely over the short-run. Minor resistance at 1.4503 could slow down the current upside momentum.
The main trend remains down in the March British Pound but buyers could step in now that the British Pound has retraced its recent three-day rally. The short-term range is 1.5832 to 1.6240. The retracement of this range is 1.6036 to 1.5988. If the trend is getting ready to turn higher, then look for buyers to begin to step in. Full Article...