Oil prices continue to test extreme long traders even as geopolitical tensions rise
Gold and silver prices lag as safe haven retreats, while oil prices fail to rise significantly despite supply concerns.
GOLD: Negative technical bias starts to form as its price crosses below its 50-day moving average
On the weekly chart and outlook, it’s a stalling bull trend technical overview that has continued to be met with significant intraday resistance and oscillations. On the daily chart, more negative technical bias is forming with safe haven assets taking a hit yesterday and the yen underperforming in the Forex market. Should positive trade talk emerge from US-China negotiations – as unlikely as that may seem – and risk appetite would increase, causing a fundamental move for gold as US yields rise back up and aid the US dollar. That means breakout strategies on any fundamental news is more ideal, but reversals in the absence of it, and fading strategies should be ignored altogether.
SILVER: Consolidatory outlook on both daily and weekly remain in place, but indicators conflicting
As with its weekly outlook, it’s looking more consolidatory but where its price is above all its main weekly moving averages (MA). On the daily chart, and as is the case with gold, it’s showing more negative technical bias that is susceptible to any greenback strength that would take US yields higher and hurt USD-denominated commodities (and FX pairs). Its price is below its 50-day MA, but still above its 100-day and 200-day MA. In terms of strategies, note the US dollar and yields, which could entice contrarian breakout strategies (to the downside or upside) over reversals and fading ones.
OIL – US CRUDE: Negative technical bias but clear reasons for positive upside potential
With geopolitical tensions rising, oil prices ought to be higher, especially for those willing to price in a risk premium on oil supplies coming out of the Middle East with the unrest there increasing. However, with oil traders holding an extreme long bias with retail traders at 86% and Commitment of Traders (CoT) speculators at 80%, any gains may test their patience first with upside retracement before an eventual upwards trend. On the weekly outlook, it remains volatile where breakout strategies work best, but for those looking to trade the short term, reversals may be more ideal keeping in mind that although the daily technical bias is negative, the finishes might be in the green for energy. American Petroleum Institute’s (API) estimate will be released tonight, though last week’s reported deficit was significantly off Energy Information Agency’s (EIA) more encompassing figure that showed a surplus the day after.
This information has been prepared by IG, a trading name of IG Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
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.
See an opportunity to trade?
Go long or short on more than 17,000+ markets with IG.
Trade CFDs on our award-winning platform, with low spreads on indices, shares, commodities and more.
Live prices on most popular markets
- Forex
- Shares
- Indices
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.
