Levels to watch: gold, silver and crude

Crude prices move to new five-month highs.

Source: Bloomberg

Mid-range gold could spark correction
Gold has continued to strengthen following engagement of the lower boundary of the descending channel that’s been in existence since mid-April. Whilst my bullishness since that moment has served me well, I am hesitant to expect a move back to $1210 straight away. This is as we have often seen this market consolidate somewhat prior to making the second half of this move.

The intraday charts show the creation of a new lower high which spells warning signs for me that we could see a move lower, or at least sideways for the coming days. Thus, whilst I do expect to move higher, with $1210 likely to be reached in the coming week, I would be hesitant to create any new trades for the time being, given the likeliness of a retracement and therefore a better entry price. However, for longs, I do expect us to see $1210 reached within the near future and as such my overall bullish bias remains until that level is hit.

Silver hesitates towards top of triangle
Silver yet again reached towards the upper boundary of the 2015 symmetrical triangle that I have been watching recently. Whilst we have failed to fully touch the descending trendline which makes up that top threshold of the triangle, I am hesitant to remain too bullish, especially since there has now been a new intraday lower high created. For that reason, I am now neutral until a clear direction is given. Either the price moves below $16.36 to create a bearish outlook, or else a new move higher would likely complete the top and then I would be bearish from $16.74 levels. Ultimately I am waiting for a reason to be bearish, but right now the market isn’t in a great place to provide a reliable signal of that.

Brent punches higher from ascending wedge
Brent crude has managed to confound the bearish connotations associated with an ascending wedge in an uptrend by punching into a new five-month high today. The break was also followed by a new retest of the upper trendline of that wedge as new found support. For this reason, the bullish outlook continues to hold owing to the ongoing creation of higher highs and higher highs.

WTI breaks higher to continue bullish outlook
WTI light has broken higher from the triangle that was in play throughout the early part of this month. Much like Brent, we have now seen a new five-month high created today. With this clear trend in place, I expect us to see further bullish price action continue apace. Near term support for any retracement would be expected around $61.08.

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