Gold breaches $1,600, traders shift to trend trading

Gold Technical analysis, overview, strategies, and levels

The focus in terms of market movement has largely been on gold ever since its ability to make fresh highs, and its weekend gap failed to get filled yesterday with rising geopolitical tensions taking its price past its $1,600 level. The question at this stage is whether recent attacks will result in further attacks or result in diplomacy. The latter seems unlikely at this stage, and regardless of the result the precious metal’s technical overview remains volatile where a break in pivot points is far more likely than those pivot points holding.

IG client and CoT sentiment for Gold

As for retail bias, it has risen to a heavy long 68% as longs opt not to take profit but instead initiate anticipating further gains, as the previous range-trading attitude shifts to a trend trading attitude instead.

Gold chart with retail and institutional sentiment

Silver Technical analysis, overview, strategies, and levels

While the weekend gap in gold is yet to be filled, for silver it has already occurred before further geopolitical tensions pushed its price past its short-term resistance level once again, this time with greater success in holding. That is keeping its bull trend line on the daily is still intact and its bull trend not showing stalling features that have recently plagued its price increases despite a rise in geopolitical tensions, but the weekly consolidatory outlook may hold if a further catalyst isn't provided to push its price past its main pivot points.

IG client and CoT sentiment for Silver

In sentiment, the bias amongst retail traders remains in extreme long territory, and hence there’s been little change in percentage terms the likes of which we have seen in gold and oil.

Silver chart with retail and institutional sentiment

Oil WTI Technical analysis, overview, strategies, and levels

Although the focus is on geopolitical tensions, we did get the first of the main weekly oil data with API (American Petroleum Institute) registering a near 6M deficit and following last week's sizeable drawdown of 7.8M. EIA (Energy Information Administration) is up next today, and expectations are for a more moderate 3.4M deficit. The recent spike in geopolitical tensions has meant that the technical overview of its energy commodity remains volatile, and as with gold pivot points are at risk of breaking as market-makers prefer to hold less liquidity in the face of major market movement.

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IG client and CoT sentiment for Oil WTI

Lastly, in terms of sentiment, while retail bias isn’t at extreme long levels like institutional sentiment at 90%, it has been rising into moderate majority long territory as traders shift from range-trading to momentum and trend trading anticipating further volatility.

Oil WTI chart with retail and institutional sentiment

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