Commodity outlook and top trading ideas by Tradebulls for today

Commodity outlook by Bhavik Patel  - Sr. Technical Analyst (Commodities), Tradebulls:
 
Commodities Outlook:
 
US Dollar index is trading at 2 week low after Fed’s first rate hike in 2018. The disappointment in currency was because the dot-plot suggests only three rate hikes for this year, against the four anticipated. Also, the economic outlook of US for this year was left unchanged. Now for any reversal in US Dollar, the dollar index needs to trade above 91. We expect the dollar index to trade in the range of 88.40-90.50. The overall trend still remains negative.
 

US Fed indicated that it would stay the course this year of 3 rate hike which is expected positive for bullions and as expected, we saw a spike in prices of Gold and Silver. Although the $20 gain may be considered a bit overdone as US Fed did what was expected but the selling pressure on bullions before coming into this event triggered the short covering a majority of the market participants were expecting more hawkish tone. However, the short covering has pushed gold prices to $1330 but additional buying should come above its recent resistance of $1340 before we can say that gold has given a range breakout. If this week, gold fails to move above $1340, then we expect gold again to trade in the range of $1335-$1308.

 
Crude oil is trading at the highest level in seven weeks thanks to surprise draw on US crude inventories. The ongoing US dollar weakness also helped in propelling prices up. The bullish sentiment in Crude started last week when inventory data showed significant drawdowns in both gasoline and distillates inventories. We believe crude now is trading at the higher end of the range and although short positions are not recommended but the runup is giving an opportunity for the crude long traders to start systemically booking profit. Brent Crude may face headwinds near $70-$71 because of the increase US Crude Oil production.  We expect Crude to test the resistance around 4300-4350 in MCX.  Any trend reversal can only come below 4050 in MCX.

 
Buy Lead
Target: Rs 160
Stop loss: Rs 153
 
Lead is one of the few base metals which is showing some strength on the charts. It has made higher low and has retraced from its support of 150. The Oscillator RSI_14 has bounced from the oversold region and is now trading at 45. Lead may face resistance around levels of 158 but the recent emergence of hammer on the daily chart at levels of 152 does indicate that the recent rally has still more legs to go. We recommend going long in Lead with the target of 160 and stop loss at 153.

 
Buy Copper
Target: Rs 453
Stop loss: Rs 437
 
Copper has made double bottom pattern in MCX and has bounced from the level of 437. The short term moving average has started to curve upwards indicating shifting in momentum. Although lower high does signify that the uptrend is weak in nature but we believe the price action on Wednesday 21 indicates bulls trying to regain control. The pattern is similar to hammer and the bulls successfully defended the level of 437 it made previously on 9th Feb, thus making double bottom pattern. We believe with weaker US dollar, the momentum on the upside will accelerate and copper may test the levels of 453. Our recommendation is going long with the stop loss of previous support of 437.

 
Disclaimer: The analyst may have positions in any or all the stocks mentioned above.