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Levels to watch: gold, silver and crude

Crude recovery in sight, while precious metals' upside could be short lived.

Silver bars
Source: Bloomberg

Gold upside could be limited
Recent strength in gold has seen a recovery of sorts since the mid-March low of $1142. However, with the 20-week simple moving average (SMA) providing resistance around $1213, today has seen some selling come into the market. The past 18 months has seen price action remain within a long-term falling wedge formation. The upper level of this would currently lie at $1285 which would provide a longer-term moving resistance point. However, the price would have to break and close above $1240 for this to come into view.

Until that happens I am looking for a possible move lower. A bearish view which would be triggered by a break and close below $1190 and, more importantly, the swing low of $1178. Until that happens, gold remains within an ascending channel and thus we could see a push higher towards $1240 and $1285 territory. Yet with the longer-term chart looking like a pullback is coming in soon, I am less convinced of that move until $1240 is surpassed.

Silver looking bearish after last week’s selloff
Silver has been sold off having hit a key descending trendline at $1732 last week. The consolidation seen since the break below $1822 back in September means that price has largely been rangebound between $1530 and $1822. As the price tightens, we are seeing a symmetrical triangle come into play.

Given that price sold-off so clearly on the upper threshold of this triangle, I expect to see silver sell off until we reach the lower boundary, currently at $1555. Should that occur, the reaction in price action will determine whether we begin looking for a breakout or another continuation of this pattern.

Looking for intraday selling to come into Brent Crude market
The glut of supply, driven in part by the OPEC's decision to retain a strong output going forward, saw prices plummet towards the back end of 2014. However, we are seeing some signs of recovery, with Brent having now successfully created a new higher high back in mid-March. We now await a possible higher high for greater confidence that the black stuff is going to begin gaining further ground over the coming months.

Prices are slowly rising, yet largely we are only seeing a very gentle incline on the current ascending channel. Thus, for now, I would rather look out for a continuation of this. Therefore an intraday selloff is more attractive than waiting to see if the price manages to create a bullish or bearish medium-term outlook. A large shooting-star candle on the four-hour chart shows a possible top to current appreciation and I am waiting for an intraday close below $5930 to give a bearish view for a move back towards the $5600 region.

WTI toying with crucial resistance zone
Unlike Brent, WTI has managed to recover sufficiently to match the high set from back in mid-February. However, that challenge is going to be very important to determine where we go from here. Resistance is being provided by that previous high of $5439 alongside the 100-week SMA (currently at $5256). A break and close above those resistance points to the completion of a double-bottom formation and therefore brings a projected target of $6600. But until that happens I prefer to opt for a continuation of the norm and I am bearish while prices remains below $5439.

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