How Commodity Charts Are Reacting, or Not, to China Currency News

06/20/10 -- http://www.MPTrader.com - News that China will re-value its yuan currency is viewed positively, of course, by world markets as it lowers inflation risk and exudes confidence about China's growth picture. There are several sectors covered this week in regards to how the China situation could and may impact each of those sectors. Today's portion of the charts cover Mike's perspective on Copper & Gold and Steel. If the Looking first at the copper situation, the iPath DJ-UBS Copper TR Sub-Idx ETN (JJC) appears to have a very big distribution top pattern with the resistance level at around 38.56 upwards to about the 42.83-43 zone.If the market is supposed to be a discounting mechanism, then it would seem as though copper would have made a move near the 40.16-40.86 area. Instead, copper had a very tough Wednesday, Thursday, and Friday of last week, and seems to be struggling. In addition, it's below its relative moving averages, and in fact, those who watch the 200- and 50-day interaction are seeing a kind of death-cross happening, where the 50-day is about to cross under the 200-day, which is a very tricky situation. Steel, as represented by the Market Vectors Steel ETF (SLX), doesn't look much better than copper. It looks to be a distribution top that has tested and so far has held the 52 to 54 area. If there's an upward move in steel and the SLX, then it will get into the 61 1/2 area and test the declining 50-day, which would be about a 6 1/2% move from its Friday close at 58.09. Looking at United States Steel Corporation (X), we can see a troubled situation. If it pops, it could get back to 49, but it has a bigger top than the top on the SLX, and between the two, it doesn't appear as though China's situation is the solution for either one or the steel sector in general. Nucor Corporation (NUE), also in the steel sector, has a suspect-looking chart. Can it rally to 43 1/2 - 44 from 41, or 8% to 10%. Possibly. Whether or not it can get through that level is another thing. If it breaks 40, down to 39, it's going to be a dicey situation for Nucor. So, that's another suspect, discounting chart mechanism for what may be considered the start of another bull move triggered by the China news. - TO SEE THE REST OF THIS VIDEO GO TO WWW.MPTRADER.COM. - MPTrader.com is a real-time diary of Mike Paulenoff's trading ideas and technical chart analysis of Exchange Traded Funds (ETFs) that track equity indices, metals, energy commodities, currencies, Treasuries, and other markets. It also includes coverage of key component stocks of these ETFs. The service is for traders with a 2-day to 2-week swing trade time horizon, who receive guidance on both specific trades as well as general market direction. For more information go to: http://www.mptrader.com

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[mistapikkles]

Awesome analysis