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Levels to watch: gold, silver and crude

Crude starts to sell off following yesterday’s bounce higher, while gold and silver show mixed messages following recent break lower.

Oil barrels
Source: Bloomberg

Gold bounce confounds yesterday’s early selloff
Despite the $1178 level previously acting as a reliable level of support throughout the past two months, the June price action has been very choppy and has often failed to truly respect the level. Yesterday’s gold selloff came following a strong move below support during the first week of the month and things initially pointed towards a move back to the 5 June low of 1162.

However, a strong round of buying in the afternoon brought about a sizeable doji, with a long lower shadow. This candle, which represents indecision, points to a possible reversal of trend. Thus, today will be crucial to note whether we are watching the beginning of a move higher or just a short-term retracement higher.

As such, a move above $1192 would bring a bullish medium-term outlook for a move back towards $1224. A move back below $1173, however, would point to a resumption of the recent selloff and thus a move towards $1163.

Gold

Silver remains within triangle apex as we await breakout
Silver remains within the apex of a triangle that has been in play throughout 2015. Despite numerous attempts to break lower, each day has seen price bought back into the triangle.

Ultimately we are awaiting direction, with a daily close either above or below the triangle. Given the fact that the current price action seemingly replicates the consolidation seen in late May, there is a high likeliness that we could see another move lower.

That said, ultimately I am awaiting a strong move in one direction, followed by a close to confirm that shift given the choppiness we have seen in precious metals recently.

Silver

Brent likely to fall today following retracement
We are clearly within a more bearish phase for Brent crude, with intraday markets showing clear lower lows and lower highs. Despite the initial support found on the upper descending trendline, price eventually broke lower to find support on the lower trendline to bounce higher.

With price clearly turning lower, I do expect us to continue the trend of lower lows and thus a move below $63.39 seems likely. However, I would become less bearish with a move above $64.78.

Brent crude

WTI selling off from 200 hour SMA
Yesterday’s move higher appears to have met significant resistance at the 100-hour simple moving average following a break higher yesterday. The picture is less bearish for US light crude as we have now seen a new higher high created following the move above $60.

Thus I am looking for a move below $59.48 to create a new lower low, which would provide a renewed bearish view. Whilst I am expecting another move lower, I await a move either above $60.36 (bullish) or a fall below $59.48 (bearish) to cement my viewpoint.

US light crude

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