Levels to watch: gold, silver and crude

Precious metals break lower ahead of Friday's jobs report.

Silver bars
Source: Bloomberg

Gold corrects following head and shoulders formation

Yesterday’s hesitancy surrounding the uptrend seen in gold during early May was well founded, with prices tumbling throughout overnight and early morning trading. For now, price has been held up by the 61.8% retracement at $1181 and we are entering a corrective phase. However, with a projected target of $1175 from the head and shoulders formation, I can see further downside to come before we return towards the upper end of this range.

Silver breaks lower from upper threshold of triangle

Clearly the two moves towards the top end of silver’s symmetrical triangle have proven enough for the bulls and we are now moving back into a bearish phase. The break below $16.37 has provided a new lower low to match the lower high and I expect to see losses continue in the coming week or so until $15.83 is reached.

That being said, with major fundamental factors to bear in mind, such as the jobs report tomorrow, I am expecting to see some volatility in the middle of the move lower.

Brent continues to push higher

Brent crude carries on moving higher, following yesterday’s spike which saw the price go just shy of the $70 mark. I do expect another move higher today, yet with $70 representing such a major psychological level, it will be very interesting to see if prices manage to move into a new high. Support is clearly being provided by the 100-hour simple moving average. Thus if we saw a move lower, a break below that indicator would be a big warning sign given that it would also coincide with the creation of a new low below $67.10.

The trend remains for a move higher, yet I am hesitant while price remains below $70.

WTI shooting star poses questions

WTI posted a shooting star formation yesterday, indicating a moment of indecision in the market. This is often seen at moments of correction and I am eager to see whether there will be a break lower or a continuation higher. Much like Brent, the trend remains to the upside and I remain bullish until a real sign of correction is shown, yet the shooting star candle is a little warning light.

Support at $59.90 is important to hold, yet ultimately we will need a move below $58.30 to create a situation where a strong correction is expected. 

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