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Can Gold Breakout?

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E-mini S&P (December)

Yesterdays close:Settled at 2601.75 gaining less than a point.

Fundamentals:The next Fed Chair Powells confirmation hearing in front of the Senate Banking Committee comes into focus today and should begin at8:45 am CT. He did release his prepared remarks yesterday after the close and said that he will follow the path started by his predecessor Yellen; hiking rates gradually while allowing the balance sheet to shrink. Also, today is a key Senate committee vote as they try to get their bill to the full Senate for a voteThursday. Two Republicans speaking out against the bill bring a hurdle in todays vote. President Trump addresses Republican Senators today on tax-reform at a luncheon. These two events alone should bring a more volatile session than yesterday, however, we also have Goods Trade Balance and Wholesale Inventories at7:30 am CT, Case Shiller at8:00and Consumer Confidence at9:00. Fed Presidents Dudley and Harker speak at8:15 am CT and 9:15. Treasury Secretary Mnuchin speaks at2:45 pm CT.

Technicals:Price action traded to a new all-time high of 2605 yesterday before backing off through the close. Key support remains at 2594.50-2596 and the market traded to a low of 2597.50 overnight before bouncing back to retest the highs. We maintain that last weeks close above that level signals a bullish breakout with the next leg signaling 2633.50. A close below 2594.50-2596 though will begin to neutralize the tape in the immediate-term.


Resistance 2616**, 2633.50***

Pivot - 2600

Support 2594.50-2596**, 2585.75-2589.50**, 2576.50**, 2567.75*, 2561.75-2562.25**, 2555*, 2539.25-2543***

Crude Oil (January)

Yesterdays close:Settled at 58.11 losing about 1.5%

Fundamentals:Prices were under pressure yesterday asThursdaysOPEC Meeting nears. This is exactly why we saidon SundaysTradable Events as well as yesterdays Morning Express that we like positioning short heading into this meeting; because it has priced in perfection. With lingering doubt that an extension would last through the rest of 2018, bulls in the largest long position since February have begun to jump ship. Adding to the selling pressure is TransCanada turning back on the 590,000 bpd pipeline two to three days earlier than initially said. Coming into focus today will be the API report after the bell.

Technicals:Price action held support at 58.09-58.14 on settlement but has continued lower into this morning and is now testing the 57.50 level. It is now clear that the key 56.94-57.02 level will come into play today, this level is about as close to a three-star as you could get and a close below here should open the doors to further selling. The only reason it is not a three-star is because we dont expect it to ultimately hold.


Resistance 58.97***, 59.96***, 62.58**

Pivot - 58.09-58.14

Support 57.50*, 56.94-57.02**, 56.54*, 55.00-55.25***

Gold (February)

Yesterdays close:Traded a high of 1303.4 before settling at 1298.9

Fundamentals:Gold has held extremely well given that equity markets continue to make new all-time highs on what seems like a daily basis. The metal backed away once again from the psychological 1300 level, but this also came as the Dollar began to stabilize on promising news for tax-reform. Though tremendous doubt lingers, the ultimate gut feeling for most traders is that they will get something done, as Senator Hatch said yesterday, by Christmas. Senators will put the bill to a committee vote today which will open the door for a full vote before the end of the week, however, two Republicans present an immediate hurdle. President Trump speaks with Republican Senators at a luncheon today to discuss the tax bill. The next Fed Chair Powells confirmation hearing in front of the Senate Banking Committee comes into focus today as well and should begin at8:45 am CT. He did release his prepared remarks yesterday after the close and said that he will follow the path started by his predecessor Yellen; hiking rates gradually while allowing the balance sheet to shrink. Both events will bring volatility to the metal, but it doesnt end here; Goods Trade Balance and Wholesale Inventories are at7:30 am CT, Case Shiller is at8:00and Consumer Confidence is at9:00. We also have regional manufacturing data from Richmond and Dallas. Fed Presidents Dudley and Harker speak at8:15 and 9:15 am CT. Treasury Secretary Mnuchin speaks at2:45 pm CT.

Technicals:Price action in Gold remains extremely constructive despite its failure to get out above major three-star resistance yesterday in the February contract 1304.7. In the December contract this level comes in at 1298.4-1300. If you are trading the metal and do not understand how to use the levels, please call our trade desk at312-278-0500and we will be happy to speak with you about it. After yesterdays session high, support was then created at 1296.5; it is very often that our levels and bias evolve through the trading day, another reason to stay in touch with our trade desk. This first key support level has held into the morning and sets up the metal for a second attack on major three-star resistance. We have seen a higher low each session for a week now, continuing this trend should set up for a move out above that resistance level.


Resistance 1304.7***, 1312.7-1316.4**, 1328-1329.4**

Support 1296.4**, 1289.8-1289.9**, 1268.1-1276***

Natural Gas (January)

Yesterdays close:Settled at 3.017

Fundamentals:The flop in developing weather patterns combined with exacerbated selling in low volume holiday hours has led to sharp reversal in price action into this morning. Last weeks weather and the early part of this week is already in the books and we are likely to see soft storage draws. However, weather developments that begin a week out has reinvigorated the bull camp and opens the door for higher price action immediately.

Technicals:As we discussed on yesterdays Midday Market Minute, the 3.05/3.06 area will be a key hurdle that we must close out above in order to encourage further buying from both the bulls and covering from the bears. We are out above here this morning and the next resistance comes in at 3.112-3.12. Todays session low comes in at 3.017-3.028 and a close below here will signal a near-term failure.


Resistance 3.059-3.063**, 3.112-3.12**, 3.163**, 3.201-3.245**, 3.321-3.36****

Support 3.017-3.028**, 2.981***, 2.929**, 2.847-2.861**, 2.753-2.7565***, 2.486-2.522****

10-year (December)

Yesterdays close:Settled at 12504

Fundamentals:Yesterday was a choppy trade following much better than expected New Home Sales. Prices finished on the high of the range for the session but has yet to breakout above resistance. Traders await todays hearing with the next Fed Chair Powell,tomorrowstestimony from Yellen and a crucial day and week for tax-reform in the Senate. Data today will also be crucial see above for the schedule. A 7-year auction today will also be in focus.

Technicals:Price action has nudged above resistance but has not done so convincingly nor has it remained out above. The chart remains very constructive, building higher lows, however, with equity markets making new all-time highs daily and a crucial week just getting under way, the bulls await a true catalyst to take prices higher. A move back below first support at 12427 will encourage further selling.


Resistance 125015-12503**, 12507*, 12519**, 125255**, 12601**, 12615***

Support 12427**, 12416-12419**, 12400**, 12222-12229***

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Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.

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About the author

Bill Baruch is President and founder of Blue Line Futures a leading futures and commodities brokerage firm located at the Chicago Board of Trade. Blue Line’s mission is to put the customer first and bring YOU the best customer service, consistent and reliable research and state of the art technology. Bill has more than a decade of trading experience. Working with clients he focuses on developing trading strategies that present a clear objective for both long and short-term trading approaches. He believes that in order to properly execute a trading strategy, there must be a well-balanced approach to risk and reward.

Prior to Blue Line, Bill was the Chief Market Strategist at iiTRADER which followed running a trade desk at Lind Waldock and MF Global.

Bill is a featured expert on CNBC, Bloomberg and the Wall Street Journal as well as other top tier publications.

Contributing author since 10/6/17 

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