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Levels to watch: gold, silver and crude

Crude’s recovery is in sight, while precious metals’ upside could be short lived.

Gold bars
Source: Bloomberg

Gold continues to fall
Gold is falling for the third consecutive day as the 20-week simple moving average (SMA), coupled with the 100-day SMA provided resistance for a move lower. Momentum indicators in the form of the stochastic and MACD show that we are likely to be around the middle of this move. Bears, therefore, will be hoping that the $1178 support level gets taken out sooner rather than later. Should we see a close below $1178, then it would give me confidence of a move back towards $1142.

Though until that happens, we remain above the 31 March swing low and thus higher lows remain in the market. For that reason I am hesitant for any further strong bearish outlook until the price closes below $1178. With that in mind, I remain bearish, but only moderately so until we either break lower or start to see signs of an intraday reversal.

Silver edges to new intraday lows
Silver has continued to move lower today following yesterday’s brief break below key support zone levels between $1614 and $1607. Price is coming back to challenge it yet again and should we see a convincing move below this level I would expect further losses, with the next support level coming in around $1578 followed by the 2015 low at $1529.

Brent continues to rise gradually
The outlook remains bullish for Brent crude, with any downside price continuing to be propped up by the 50-hour SMA. Price has cleared out the key resistance point of $5980 and is now challenging $6060. Given the hourly shooting-star formation following a price challenging that level, I would not be surprised to see prices return to the 50-hour SMA today. However, the outlook remains bullish as long as prices remains above this indicator.

WTI continues to test major resistance
WTI has gained further ground this morning, as it attempts to break above a major point of resistance at $5423. Given that this represents the neckline of a possible double-bottom formation, a break to the upside would be a major bullish technical signal. My strategy is usually to expect price to continue to respect a major level until it is broken and thus I am expecting some sellers to come back into the market at these levels.

However, given that price is exhibiting higher lows alongside multiple challenges of that $5423 level, I would not be surprised at a break higher. Should that occur, I would be looking for a daily close above $5423, followed by a retest of that level as new found support for my bullish signal.

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