Levels to watch: gold, silver and crude

A spike in gold and silver points to a bullish phase.

Mining truck
Source: Bloomberg

Gold support continues consolidation

Yesterday saw a substantial bounce upon the historical $1178 support level, putting to bed the idea that we could return back towards the $1130 level anytime soon. The size of this bounce and close relatively near the top of the candle meant yesterday formed an opening marubozu candle, which is typically a sign of extreme bullishness. Given that we are trading within a range, any further upside would have to pass through significant resistance.

Current near-term support is at $1199, which given the current flag formation being formed above that level, should hold to provide the next leg higher. Resistance is likely to be found at $1210 and $1224, which if broken would point to a possible move up to the $1238 and $1256 levels for gold.

Overall I am now bullish given the close above $1199 and as long as price remains above that level I expect to see further upside towards $1224.

Silver flag signals further upside

Friday saw silver bounce upon the lower boundary of a symmetrical triangle dating back to December. This pointed to a possible reversal and as soon as price broke through the 20-period SMA (4 hour), we saw that massive spike higher in both gold and silver.

The consolidation today has formed a textbook flag formation with support provided by the 100- and 200-period (4 hour) SMA. Thus as long as price remains above $1630, I expect to see further strength come into play with a move back to $1680 likely.

Brent retracement likely to be short-lived

Crude oil prices have enjoyed somewhat of a resurgence in the past three months, gaining over $17 since the $46 low seen back in January. With some saying that they still believe prices could go lower long-term, it is hard to say whether that is going to be the case, yet from a technical standpoint things continue to look positive for now.

The past two trading days have seen a moderate retracement lower, with the 100-hour SMA (currently $6394) and 50-four-hour SMA (currently $6370) providing support for any move lower. Thus I expect to see another break higher in the near future, with $6750 a likely region of resistance. Conversely, should price close back below $6300, and in particular $6130, it would bring question marks of a potential reversal lower in the following weeks.

WTI consolidation points to short-term strength

Recent consolidation in WTI came as a result of a strong bull run starting in mid-March. Coming off the back of a medium-term uptrend, the outlook of an eventual breakout is for a move higher. With price currently near the lower level of this current bullish rectangle, I expect to see a move higher as long as the price is above $5573. This would call for a move back towards $5830 in the near-term, with the medium-term picture being determined by the eventual breakout direction.

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