Crude oil is on the upswing while gold is under pressure in the wake an agreement on a bailout for Cyprus but the trends now on display may prove short-lived. Talking Points Crude Oil is on the Rise as Cyprus Bailout Deal Stokes Risk Appetite Gold and Silver Turn Lower on Diminished Market Dislocation Fears Crude oil is pushing higher along with Asian and European stock exchanges as risk appetite firms after Cyprus and the so-called “troika” (EU/ECB/IMF) agreed to measures paving the way for launch of the country’s bailout program. Gold and silver are trading lower as the apparent reduction in tail risk stemming from the agreement dents demand for alternative store-of-value assets. A lackluster response from the Euro hints not all is well however, warning that the optimism in the shares and commodities spaces may not prove lasting. Forex traders’ lack of enthusiasm seems reasonable. The critical issue in for markets in following the Cyprus situation remains that of precedent for larger Eurozone countries, and the way in which the crisis has been managed does not seem to inspire a great deal of confidence. At best, depositors in Cypriot banking institutions now have to contend with capital controls locking up their money. At worst, they may lose as much as 40 percent of it. This raises an important question: why should a depositor in any Eurozone country similarly vulnerable to a banking crisis expect to be unscathed if a Cyprus-like calamity were to occur there? If this expectation seems unreasonable in light of today’s events, said depositor (and many others) may well opt not to keep money in the Eurozone. This leaves markets waiting to see if a mass exodus of capital does indeed occur, for then the worst-case scenario will be upon the Eurozone whether or not Cyprus receives its aid. WTI Crude Oil (NY Close): $93.71 // +1.26 // +1.36% Prices are testing resistance at 94.07, the March 19 swing high, with a break higher on a daily closing basis targeting 95.51. A break above that targets trend line resistance at 96.33. Near-term support is at 91.97, the 23.6% Fibonacci expansion.
Daily Chart - Created Using FXCM Marketscope 2.0 Spot Gold (NY Close): $1608.58 // -6.30 // -0.39% Prices are approaching support at 1597.76, the 14.6% Fibonacci expansion, with a break lower exposing the 23.6% level at 1586.30. Near-term resistance is at 1616.98, the March 21 high. A move above that aims for a longer-term falling trend line at 1642.66.
Daily Chart - Created Using FXCM Marketscope 2.0 Spot Silver (NY Close): $28.74 // -0.44 // -1.49% Prices continue to consolidate above support at 28.46, the 23.6% Fibonacci expansion. Near-term resistance is in the 29.42-92 area, with a break higher exposing a falling trend line now at 30.24. Alternatively, a reversal below support targets the 38.2% level at 27.86.
Daily Chart - Created Using FXCM Marketscope 2.0 COMEX E-Mini Copper (NY Close): $3.466 // +0.030 // +0.87% Prices are testing above resistance at 3.483, the 23.6% Fibonacci retracement. A break higher exposes the 38.2% level at 3.542. Near-term support is at 3.447, the 14.6% Fib, with move beneath that aiming for the March 19 swing low at 3.388.
Daily Chart - Created Using FXCM Marketscope 2.0 --- Written by Ilya Spivak, Currency Strategist for Dailyfx.com To contact Ilya, e-mail ispivak@dailyfx.com. Follow Ilya on Twitter at @IlyaSpivak To be added to Ilya's e-mail distribution list, please CLICK HERE
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Forex market volatility prices have fallen to start the week, but given sharp market swings on news headlines we expect choppiness and sharp intraday price swings to continue. View the table below to see our strategy preferences broken down by currency pair. DailyFX Individual Currency Pair Conditions and Trading Strategy Bias 
View how to automate the high-volatility Breakout2 Trading System via our previous article and webinar recording. Auto trade the trend reversal-trading Momentum2system via our previous article and webinar recording. Trade with strong trends via our Momentum1 Trading System and view an archived webinar Use our counter-trend Range2 Trading system and view an archived webinar guide on automation --- Written by David Rodriguez, Quantitative Strategist for DailyFX.com To receive the Speculative Sentiment Index and other reports from this author via e-mail, sign up to David’s e-mail distribution list via this link. Contact David via Twitter at http://www.twitter.com/DRodriguezFX Facebook at http://www.Facebook.com/DRodriguezFX New to forex? Sign up for our DailyFX Forex Education Series Definitions Volatility Percentile – The higher the number, the more likely we are to see strong movements in price. This number tells us where current implied volatility levels stand in relation to the past 90 days of trading. We have found that implied volatilities tend to remain very high or very low for extended periods of time. As such, it is helpful to know where the current implied volatility level stands in relation to its medium-term range. Trend – This indicator measures trend intensity by telling us where price stands in relation to its 90 trading-day range. A very low number tells us that price is currently at or near 90-day lows, while a higher number tells us that we are near the highs. A value at or near 50 percent tells us that we are at the middle of the currency pair’s 90-day range. Range High – 90-day closing high. Range Low – 90-day closing low. Last – Current market price. Bias – Based on the above criteria, we assign the more likely profitable strategy for any given currency pair. A highly volatile currency pair (Volatility Percentile very high) suggests that we should look to use Breakout strategies. More moderate volatility levels and strong Trend values make Momentum trades more attractive, while the lowest Vol Percentile and Trend indicator figures make Range Trading the more attractive strategy. HYPOTHETICAL PERFORMANCE RESULTS HAVE MANY INHERENT LIMITATIONS, SOME OF WHICH ARE DESCRIBED BELOW. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN. IN FACT, THERE ARE FREQUENTLY SHARP DIFFERENCES BETWEEN HYPOTHETICAL PERFORMANCE RESULTS AND THE ACTUAL RESULTS SUBSEQUENTLY ACHIEVED BY ANY PARTICULAR TRADING PROGRAM. ONE OF THE LIMITATIONS OF HYPOTHETICAL PERFORMANCE RESULTS IS THAT THEY ARE GENERALLY PREPARED WITH THE BENEFIT OF HINDSIGHT. IN ADDITION, HYPOTHETICAL TRADING DOES NOT INVOLVE FINANCIAL RISK, AND NO HYPOTHETICAL TRADING RECORD CAN COMPLETELY ACCOUNT FOR THE IMPACT OF FINANCIAL RISK IN ACTUAL TRADING. FOR EXAMPLE, THE ABILITY TO WITHSTAND LOSSES OR TO ADHERE TO A PARTICULAR TRADING PROGRAM IN SPITE OF TRADING LOSSES IS MATERIAL POINTS WHICH CAN ALSO ADVERSELY AFFECT ACTUAL TRADING RESULTS. THERE ARE NUMEROUS OTHER FACTORS RELATED TO THE MARKETS IN GENERAL OR TO THE IMPLEMENTATION. OF ANY SPECIFIC TRADING PROGRAM WHICH CANNOT BE FULLY ACCOUNTED FOR IN THE PREPARATION OF HYPOTHETICAL PERFORMANCE RESULTS AND ALL OF WHICH CAN ADVERSELY AFFECT ACTUAL TRADING RESULTS. Any opinions, news, research, analyses, prices, or other information contained on this website is provided as general market commentary, and does not constitute investment advice. The FXCM group will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance contained in the trading signals, or in any accompanying chart analyses. http://www.dailyfx.com/forex/technical/trading_strategies/trading_strategies_explained/2013/03/05/range_trading_with_the_speculative_sentiment_index.html
