Commodity outlook by Tradebulls Securities: Buy crude, Sell lead

Commodity outlook and trading ideas by Bhavik Patel - Sr. Technical Analyst (Commodities), Tradebulls.

Indian rupee is following the Chinese Yuan. As soon as Chinese Yuan broke 7 levels against the US dollar, we saw accelerating depreciation in our Rupee. At present, we expect Rupee to test the levels of 72.20. Any respite in rupee may only come if Chinese Yuan sustains below 7.04. On the upside, we expect Chinese Yuan to test levels of 7.12.

Gold: We don’t expect gold to go anywhere this month. The range for gold is expected to be around $1,526-$1,485. The next trigger for gold would be rate cut from the US Feb this September. In the first week of September, the talks of rate cut would increase which would give added ammunition for gold buyers to flex their muscle and take it above $1,535. At present, gold is consolidating between the said range and we expect gold to close near $1,500 next week. In MCX, gold is expected to trade in range of 37,300-38,600. We don’t see much upside or downside in gold. Silver also is expected to trade in range of 42,300-44,700.

Crude oil has recovered from $52 to $60 in Brent this week due to Yemeni attacks in Saudi Arabia and US crude oil inventory withdrawal. We expect Crude to test levels of $64 on the upside and $56 on the downside. Crude oil has headwinds in form of global slowdown growth which will weaken its demand while OPEC is trying to keep supply under check to boost its prices. Natural Gas looks like short term bottom has been made but with record production, we see it touching till 165 before coming into range of 148-160.

Recommendation:
 

Sell Lead below 151

Target: 146

Stoploss: 156

Lead has been trading in the range of 151-157 since June 7. The range suggests ongoing consolidation and any new trade can only come if price action breaks this range. 157-158 is proving to be strong resistance while 151-150.50 is proving to be strong support and we would recommend going short only below the support area where buyers are overwhelmed by the sellers.  Bollinger bands have narrowed down indicating in near term, we may see breakout or breakdown from this range. So sell below 151 for target of 146 and stoploss of 156.

Buy Crude above 4,150

Target: 4350

Stoploss: 4000

Crude oil has strong resistance around 4,150 as near term swing high is 4,167. Since mid-June, crude has twice tried to break that level unsuccessfully. So, we believe any breach above 4,150 will create fresh long positions. RSI_14 is also trading at 54 indicating bullish trend and Crude oil is also trading above 200 day moving average on daily scale. The short-term moving average of 13, 20 and 50 has given buy cross over and price action is above those short term average which again confirms bullish trend. However it is better to go long above the resistance zone of 4,150 so buy above that level with target of 4,350 and stoploss of 4,000.