Levels to watch: gold, silver and crude

Commodities enjoy a bounce, yet the downtrend remains for now.

Silver bars
Source: Bloomberg

Gold in middle of descending channel

Gold has enjoyed somewhat of a resurgent few weeks, following the support found just $12 shy of the $1130 multi-year low. The price of gold has been trading within a falling wedge formation since mid-2013 and this recent upside has brought us to around the middle mark of that as denoted by the 20-week simple moving average.

There is always a chance that we are going to see a reversal lower in the middle rather than the top of this ranging formation, yet for now, we continue to create higher-highs and lows on both the daily and intraday charts. Thus, I am bullish for the time being.

Price has returned to the 1 April peak of $1210 and that appears to be providing substantial support. With the MACD histogram turning higher alongside this big support level, I expect to see the price move towards the upside soon with the $1224 swing high a likely target.

Silver consolidating before likely move higher

Silver has seen indecision ruling market sentiment over recent weeks, following a strong mid-March push higher. Mirroring the late January/early February price action, support is around the $16.55 region for the time being.

Price has typically returned to the 50-week SMA throughout the last year's move lower in silver. Thus there could be more yet to run in this recent upside where price would have to break and close above $18.47 to really challenge the bearish long-term outlook.

Brent showing possible bullish resurgence

The support seen in mid-March on the 61.8 Fibonacci retracement of $52.72 has clearly given the pair a boost. With the fact that we did not return to the $46.40 low, comes a more bullish outlook from the creation of a new higher-low. We now need a higher-high to create a greater degree of confidence that the price of Brent is going to recover more substantially.

Near-term resistance is found around $59.80 and of course more importantly the $62.95. To the downside, there is an ascending trendline which has underpinned the move from the January low at $46.40. A break below this would give a signal to the bears out there to get back into the market.

WTI approaching major resistance

The price action in WTI appears to be leading Brent to some extent recently. The move which saw WTI hit a new multi-year low in mid-March was the spark which brought both WTI and Brent back higher. On this occasion, the jump in US light crude has brought the price back to a major resistance level at $54.40 which is going to be a key infection point.

A close above $54.40 would bring a double bottom formation and thus a more bullish outlook for the coming weeks. However, this level also provides a great resistance point for short sellers to grab hold of as a potential selloff mark. Thus for the time being, I am bearish, yet this is only as long as price remains below $54.40 which if broken, would then signal a more bullish outlook.  

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