by ScottPluschau

Charts to keep an eye on this week - March 26, 2012

Copper is still coiling on the daily timeframe. This is an explosive pattern. Trading on the smaller degree timeframes with the structure of the daily chart risks being whipsawed until there is a breakout. Until then it is likely to be randomness or noise, and I have no edge in trading noise or randomness.

Why do I want to keep an eye on copper? What happens to copper may have ramifications for silver as they are both industrial metals. Copper can also be a leading indicator of economic strength. What happens here may have ramifications to equities. Copper can also indicate inflation or deflation, and so what happens here can be an early warning for other asset classes such as the US Dollar Index and the US Treasury market.

(Click on charts to expand)

The big battle in futures today is in the Dollar Index at the 80.00 level. There is a "Balance Area" on the 30 minute chart, and we are at the lower extremes of the balance area. This is a key reference area to trade from. A breakdown from here and this horizontal support level can become a resistance level making it more difficult for the Dollar to retake the 80.00 level. I'm bearish on a breakdown here in the short term.

I touched on the latest COT report in the Dollar here:
http://scottpluschau.blogspot.com/2012/03/commercial-traders-are-now-greater-than.html

The 30 year treasury has rallied off of major support. Major resistance will be at the prior breakdown point if it gets there. There are many posts on the blog about the 30 year treasury that are worth reviewing. I would not be confident in the next test of support holding strong. I will be focused on trading the 30 year treasury to the short side again in that case.

I'm bullish gold above $1,670 and bearish below $1,630 in the short term.

There is wicked volatility in Crude Oil. Major support is clearly defined. A breakdown here and I would begin to get bearish in the short term. A move above $109.00 should strike fear in the bears.

I have included on the left hand side below a year-to-date daily chart with "Volume Profile" and its "High Volume Node". Crude oil is at a key reference area. As long as crude is above the high volume node, I want to favor trade setups to the long side.