Levels to watch: gold, silver and crude

Commodity consolidation is the order of the day as a lack of substantial direction means many are in a ‘wait and see’ mode.

Oil barrels
Source: Bloomberg

Gold’s selloff brings bearish flag formation

The substantial sell off yesterday took back much of the gains in the middle of last week. With price consolidating, there is a high likeliness that we are going to bounce up, simply due to the fact that the current trend is towards higher highs and lows. However, with the current consolidation forming a flag rather than a more substantial bounce higher, there are also warning signs that further losses could be around the corner.

As such, I will await a break from this formation, with a break lower likely to point towards a move to $1178. Otherwise a move towards the upside could bring another major leg higher with initial resistance at $1192 for gold.

Gold chart

Silver fails to create new high and pulls back into triangle

Silver has pulled back following the attempt to create a new high yesterday. The inability to do so says a lot about the strength of any bullish momentum and makes it likely that we are going to trade in a low volatility and rangebound environment for some time yet. The ascending channel in play will be buy and sell triggers for many in the markets.

In particular, a move to $16 would be particularly likely to cause a bounce higher as it is not only a major handle, but also the meeting point of two notable trendlines. Therefore I am bullish for a move back towards the $16.30 region, yet could see us gain a better price in the short-term.

Silver chart

Sharp move lower in Brent is recovered yet points to further losses

Brent saw a sharp selloff yesterday, which was subsequently bought into for a short-term recovery. Resistance appears to be formed around the 20-period SMA and thus an intraday close above that would point towards a move back towards the upper end of this descending channel (around $64.00).

Regardless of whether we do see that short-term bounce or not, the trend is certainly towards further losses and as such, a move to $62 is likely this week.

Brent crude chart

WTI triangle shows lack of direction, for now

Recent tightening in price action for WTI has failed to create a new higher high, but with higher lows in place, there is a triangle to be watching for now. Early strength has faded from the upper end of the triangle and thus I expect to see the sellers dominate today’s session for a move back towards $59.50.

Ultimately the breakout from this triangle will determine direction, yet given the recent trend I would expect it to be a bullish resolution.

WTI chart

Denna information har sammanställts av IG, ett handelsnamn för IG Markets Limited. Utöver friskrivningen nedan innehåller materialet på denna sida inte ett fastställande av våra handelspriser, eller ett erbjudande om en transaktion i ett finansiellt instrument. IG accepterar inget ansvar för eventuella åtgärder som görs eller inte görs baserat på detta material eller för de följder detta kan få. Inga garantier ges för riktigheten eller fullständigheten av denna information. Någon person som agerar på informationen gör det således på egen risk. Materialet tar inte hänsyn till specifika placeringsmål, ekonomiska situationer och behov av någon specifik person som får ta del av detta. Det har inte upprättats i enlighet med rättsliga krav som ställs för att främja oberoende investeringsanalyser utan skall betraktas som marknadsföringsmaterial.