Levels to watch: gold, silver and crude

Gold returns to its range while crude creates a crucial new low.

An oil rig
Source: Bloomberg

Gold returns to the status quo following price breakout attempt

The importance of a daily closed candle for any long-term breakout has been proven here, with the price failing to hold onto gains seen on Monday. That inability to close above $1224 means we have now moved back into the range that has been prevalent throughout the past two months. As such, I am looking for a return to $1178 in the near future for gold.

This morning has seen a move below $1206 and that gives me confidence of a further move lower for the remainder of this morning. Thus I am bearish for a continuation of this range between $1192 and $1224.

Silver tries to find support following pullback

We have continued to see the price of silver pullback following the sharp spike seen as a result of last week’s triangle breakout. Given the breakout and the creation of new three-month highs, I do expect us to see a more bullish mode for silver, and thus it is a case of finding where this retracement will stop and the buyers come back in.

Current intraday price action points to possible support at the 200-day and 200-hour SMAs, which have propped up the price this morning. However, should we see any further moves lower, I would expect to see bullish sentiment return around $16.78 and $16.62.

Brent creates new low and points to bigger move lower

Yesterday saw Brent accomplish what I had been holding out for, and that was a move below $64.26. That wasn’t expected to necessarily spark a major selloff, but instead acted as another piece of confirmation that we are seeing something that could resemble a market top in Brent crude. Over the past two weeks, we have now seen both a new higher high created, alongside two higher lows. The move below $64.24 could have been seen as the completion of a double top, which is a bearish signal. Yet ultimately, we are now exhibiting some of the features of a downtrend and while it looks like we are likely to move higher over the coming days, I expect the bearish tone to kick back in soon enough. Thus I see any significant move higher as an opportunity to sell into a long-term move lower over the coming weeks. This would only be invalidated with a move above $67.87.

WTI also creates new low

Similarly, WTI has seen a sharp move lower yesterday which has brought about increased confidence of a longer-term selloff. The bounce we’re seeing today could be the beginning of another lower high, and I am open minded to this representing a new short-term bullish phase. However, I remain bearish overall and am using any major bounce as an opportunity to short the market at a better price.

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