Levels to watch: gold, silver and crude

Gold has found support off a rising trendline, but oil continues to flounder this morning.

Oil pipes
Source: Bloomberg

Gold eyes close above $1220

The rising daily trend from the November lows has provided excellent support, coinciding with the $1200 level. A close above $1220 and the 100-day moving average, coupled with a breakout from the daily relative strength index’s descending trendline could signal the beginning of a new leg higher for gold, with an initial target of $1230 and then the 200-DMA.

A drop back will find support at $1200, with a drop through the November trendline targeting the area around $1180.

Silver holding above $16.50

Silver looks less appealing for the bulls, stuck below the 50- and 100-DMAs with the RSI still trending lower. For the moment the price is holding above $16.50, but a break lower targets first yesterday’s low at $16.30 and then on to the December/January lows around $15.50.

Any bounce higher will need to recover the rising trendline from the December lows that was broken earlier this week, and then move above the descending trend from the $18.50 peak seen in late January.

Brent’s rally waning

Brent crude finds itself at something of a crunch point. The 20-DMA is poised to cross above the 50-DMA for the first time since June, a bullish sign. However, the RSI has dropped through its 11 February low, while other momentum indicators point to the rally fading fast and a possible pullback in the offing.

The hourly trendline has been broken, marking a departure from the February uptrend, and although the hourly RSI is now oversold and thus hints at a bounce in the short term back towards $60, the rally in crude appears to have run its course. A firm bounce would need to clear the $63 area, the major resistance level from 17 February.

WTI supported by 20-DMA

US light crude has tested its rising uptrend from the January lows, but has moved back above it for the time being. A continuation of this bounce would target $52 and then the $54 level that halted progress throughout the month so far.

A dip lower targets $48 and then $46.80, although for the time being the 20-DMA has done well to act as support for the current move higher.

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