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Levels to watch: gold, silver and crude

Commodity consolidation is the order of the day as a lack of substantial direction means many are in a ‘wait and see’ mode.

CFDs are a leveraged product and can result in losses that exceed deposits. Trading CFDs may not be suitable for everyone, so please ensure you fully understand the risks and take care to manage your exposure.
Oil barrels
Source: Bloomberg

Gold’s selloff brings bearish flag formation

The substantial sell off yesterday took back much of the gains in the middle of last week. With price consolidating, there is a high likeliness that we are going to bounce up, simply due to the fact that the current trend is towards higher highs and lows. However, with the current consolidation forming a flag rather than a more substantial bounce higher, there are also warning signs that further losses could be around the corner.

As such, I will await a break from this formation, with a break lower likely to point towards a move to $1178. Otherwise a move towards the upside could bring another major leg higher with initial resistance at $1192 for gold.

Silver fails to create new high and pulls back into triangle

Silver has pulled back following the attempt to create a new high yesterday. The inability to do so says a lot about the strength of any bullish momentum and makes it likely that we are going to trade in a low volatility and rangebound environment for some time yet. The ascending channel in play will be buy and sell triggers for many in the markets.

In particular, a move to $16 would be particularly likely to cause a bounce higher as it is not only a major handle, but also the meeting point of two notable trendlines. Therefore I am bullish for a move back towards the $16.30 region, yet could see us gain a better price in the short-term.

Sharp move lower in Brent is recovered yet points to further losses

Brent saw a sharp selloff yesterday, which was subsequently bought into for a short-term recovery. Resistance appears to be formed around the 20-period SMA and thus an intraday close above that would point towards a move back towards the upper end of this descending channel (around $64.00).

Regardless of whether we do see that short-term bounce or not, the trend is certainly towards further losses and as such, a move to $62 is likely this week.

WTI triangle shows lack of direction, for now

Recent tightening in price action for WTI has failed to create a new higher high, but with higher lows in place, there is a triangle to be watching for now. Early strength has faded from the upper end of the triangle and thus I expect to see the sellers dominate today’s session for a move back towards $59.50.

Ultimately the breakout from this triangle will determine direction, yet given the recent trend I would expect it to be a bullish resolution.

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CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.