Levels to watch: gold, silver and crude

Crude continues to look toppy following a failure to create a new high and the precious metals begin to turn following recent strength.
Oil barrels
Source: Bloomberg

Gold evening star points to move lower
Yesterday’s doji candle showed a clear inability to capitalise on the gains that saw a new three-month intraday high created. The initial selling seen today has brought gold's price back below the crucial $1224 support level. Should we fail to see any strong resurgence in the later part of today, then a bearish evening star reversal formation will be created.

With that in mind, I am bearish while price remains below $1224. This would likely see gold return to its consolidation mindset which saw price consistently gravitate towards the $1178 mark.

Silver pulling back following triangle breakout
Wednesday’s breakout from a symmetrical triangle formation provided a bullish outlook for silver, which has played out well. However, today’s early selloff is looking likely to create a bearish engulfing pattern which is also joined by a break into lower lows on the intraday charts. As such, it looks like we will be moving into a retracement phase which brings a bearish countertrend mentality.

That being said, I am not looking to sell into this market, instead I’m hoping to find a better price to buy at the bottom of this retracement. Thus I expect a move lower and am looking for signs of intraday support to come in to give me a long entry. One such possible place could be the 200-day simple moving average (SMA), currently $17.01, followed by the 1 May swing high – $16.77.

Brent continues to show signs of a top
The sell off in brent crude appears to be continuing today, with the price currently resting on the support level of $65.36. I am a bear in the medium-term and do think we have topped out at $70 for now.

Thus, a move below $65.36 will be crucial for the next leg lower following the recent mini-revival last week. Should we see a move below $65.36, then I would expect us to see a move towards $64.23. Otherwise, any bounce higher would be an opportunity to sell at a better price.

WTI attempting to create new low
Unlike brent, light crude hasn’t created a new lower low to match the lower high and that is what we are seeing attempted now with a push to break below $59.32. That level represents both the 14/15 May lows and 100-hour SMA.

If we do see a move below that level, I would expect to see us move towards the next support level at $58.14. Ultimately, much like brent I see us moving lower in light crude and thus I am looking for a move lower towards $58.14 and $55.73 in the coming week.

The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication.