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Levels to watch: gold, silver and crude

Commodities enjoyed the Federal Reserve bounce, but will it last?

Gold bars
Source: Bloomberg

Gold consolidation continues as we await directional confirmation

Gold posted a long-legged doji candle yesterday, highlighting the indecision that dominates the market following Wednesday’s Fed-driven jolt higher.

Despite that move up, we await confirmation that this is anything more than just another retracement higher within a clear primary downtrend, as signified by price action below multiple long-term moving averages.

Given that long-term trend, I remain bearish yet aware that we could see further short-term upside. Thus, as long as price remains below the 20-day simple moving average (currently $1182) and more importantly the swing low of $1191, then I will see spikes as an opportunity to gain a better entry price. A close above $1191 would give me an idea that we could be set to reverse towards the upper threshold of the descending channel that has been in place since mid-2013.

Silver upside questions gold’s outlook

Unlike gold, silver has managed to break above both the 20-DSMA and the late February swing low ($1609). This of course brings a question to the bearish sentiment that has dominated February and March so far. However, despite breaking above resistance as provided by a swing low, we have still not seen a break of the lower-lows and lower-highs framework which defines a downtrend.

Thus while I would not be surprised to see some further upside given the nature of the recent move, I remain bearish unless we break and close above the 50% retracement and swing high of $1689. Subsequently, I remain hopeful that we can see the $1463 support level hit in the coming weeks.

Brent continues to ease back following spike

More of the same from Brent as the consolidation that dominated yesterday’s session seems to be continuing yet again. The easing since Wednesday's Fed announcement will seem to many as being somewhat tedious given the loss of volatility. However, with this comes a tightening of the Bollinger band which is seen by many as a signal that volatility could be impending.

I remain bearish despite this recent resurgence and will remain so unless price closes above $5905 (23.6% Fibonacci retracement and swing high).

WTI tentatively falling

The price of WTI crude is also dropping off somewhat, following a day in the red yesterday. Wednesday’s upside found clear resistance on the 50% retracement of the March high to low, at $4751. Thus I am now awaiting a move outside of this current trend, which means either a break below $4404 or a move above $4751 will be giving me direction.

Despite being bearish, I could see some further upside considering the respect given to the $4494 in the past. Thus while price is within close proximity to $4494 I am bullish for a short intraday move higher. However, I also believe that we will see prices fall below $4494 in the end and once that occurs it is likely we could see price return to $4264 at least.

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