Technical analysis: key levels for gold, silver and crude

News of a possible reduction in global tensions sent gold and silver tumbling on Friday, as investors surged back into equities at the close of the week.

An oil pump
Source: Bloomberg

A lighter week in macro-economic terms leaves commodities looking vulnerable, although a modest move higher may be underway in US light crude.

Gold supported by 20-DMA

News of a potential de-escalation of the crisis in eastern Ukraine sent gold tumbling on Friday, and while off the lows today gold may struggle if risk appetite begins to return after a torrid week for equity indices.

The $1311.50 zone seems to be providing upside resistance which would need to be broken to begin any attempt at challenging the $1320 level from mid-July. The 20-day moving average at $1302 and 50-DMA at $1299 would be areas to look for support should gold falter in the coming days.

Nonetheless the daily relative strength index is still holding steady for now above 50, even if it has not been able to continue its August upward move.

On the hourly chart the $1305 level is proving to be useful support, even if the drop through the 50-hour MA has stunted the rally for now.

Silver may test $19.50 level

Silver has not looked as well-supported as gold in recent sessions and Friday’s price action bore out that fact.

Indeed, Friday saw the metal close below the 100-DMA once again, with the $19.75 area now in focus as possible support, as was the case last week. Beyond this, the $19.50 level comes into view on the downside, and we may see a test of this in short order as the daily RSI continues its downward trend from the overbought condition of late June/early July.

The downward trendline from those highs around $21.50 is still in force, with the 100-hour and 200-hour MAs acting as powerful resistance.

$104 still supporting Brent

The $104 level is still holding as support for Brent, but the Friday spike through $106 has been repulsed as fears over supply disruptions ease.

Only a close below $104 would open the way to a retest of the November lows around $103.30, while on the upside $106 is now clearly established on a daily chart as the resistance level that needs to be cleared.

The daily RSI is nudging higher but at a snail’s pace, while we have yet to see any turnaround in the moving average convergence/divergence in this timeframe.

On the hourly chart Brent needs to clear the 100-hour MA for a real move higher, but the decisive defeat of the Friday bounce through the 200-hour gives the downside scenario pre-eminence at present.

WTI holding above 100-hour MA

Arguably WTI has found support at a trendline that runs from the lows of June 2012, and saw a test at the beginning of the year. The latest bounce occurred around the $96.55 level, and even with the dive on Friday we may be witnessing a modest increase in buying momentum.

The daily RSI is continuing to rise, albeit slowly, and $98.50 becomes the level to watch for any resistance in terms of price action.

WTI continues to sustain its hold above the 100-hour MA for now, but a close above the 200-hour will be needed to see gains in the direction of the magic $100 level.

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