Trading gold’s volatile overview
Breakout strategies have thus far outperformed for the precious metal, while oil’s stalling bull trend has aided reversals.
Gold Technical analysis, overview, strategies, and levels
From a Weekly standpoint, last Tuesday's plummet was enough alone to aid long-term breakout strategies to the downside, with volatility subsiding towards the end of the week even if it aided buy breakout strategies on the Daily once more on Thursday. The bull trend channel on the Weekly chart was already breached on the move higher a few weeks back, but the bulk of its main technical indicators continue to flash green. And as always it was silver that experienced more volatility, giving the gold/silver ratio a chance to rise off of the lows and oscillating within the 70s.
Conformist technical overview strategies remain breakout strategies on anticipation that with increased volatility, key levels and pivot points are unlikely to hold in the short-term. Those looking to trade opposite the current technical overview can consider reversal strategies, initiating after the level has been breached and as price retraces avoiding any initial sharp move against the key levels.
IG client* and CoT** sentiment for Gold
There's been little change in sentiment in percentage terms for gold amongst CoT speculators, with a drop in longs by 14,980 lots outdoing a smaller 287 lot reduction in shorts. The interesting story has been on the retail front, with majority long bias rising from a heavy buy 70% at the beginning of last week to start this week off at an extreme long 79%
Gold chart with retail and institutional sentiment
Oil WTI Technical analysis, overview, strategies, and levels
It was another week of rangebound movement for oil prices, briefly crossing its 200-day moving average before retracing back down towards the end of the week below it, aiding conformist buy-on-reversal strategies on Friday for the Daily but failing to reach either of its key Weekly levels. The technical overview is showing far more signs of neutral consolidatory movement, with a trending ADX still lingering thanks to the volatility experienced earlier this year. In oil data, Baker Hughes US oil rig count dropped from 176 to 172, though coronavirus concerns and restrictions have kept somewhat of a lid on energy prices. The OPEC+ technical meeting is expected to be on Wednesday, with preliminary PMIs this Friday an item to note on the manufacturing front.
From a strategic standpoint, those anticipating further price gains can opt for conformist buy strategies off of its key Weekly levels, be it with a buy breakout off of its 1st Resistance level or a buy-on-reversal off of its 1st Support level. Otherwise, those that think the current technical overview will fail can consider contrarian strategies selling at the 1st Resistance level and selling at the 1st Support level, even if it runs opposite the current technical overview.
IG client* and CoT** sentiment for Oil WTI
As for sentiment, CoT speculators are still holding an extreme long bias, with retail traders briefly shifting to majority short intraweek on the price gains as they range-trade these moves.
Oil WTI chart with retail and institutional sentiment
*The percentage of IG client accounts with positions in this market that are currently long or short. Calculated to the nearest 1%, as of today morning 8am for the outer circle. Inner circle is from the previous trading day.
**CoT sentiment taken from the CFTC’s Commitment of Traders report, outer circle is latest report released on Friday with the positions as of last Tuesday, inner circle from the report prior.
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