Levels to watch: gold, silver and crude

The bounce in crude is likely to be shortlived.

Source: Bloomberg

Gold consolidation remains as support holds
Gold remains within the middle of a falling wedge that has been in play since mid-2013. The current period of consolidation has remained for almost two months and for the most part, the support level of $1178 has held up. Thus, I use the $1178 level as a pivot. Any move back to that level provides a buying opportunity to play the sideways price action back towards the $1190 region. However, should price close below $1178 on the daily timeframe, it would likely signal a move back to $1145. With a weekly stochastic failure swing likely to complete in the coming weeks, I do have an overall bullish bias for a move back towards the upper-end of this wedge, around $1255.

Silver bounce signals possible short-term strength
Silver appears to be moving lower following the move towards the upper-end of the symmetrical triangle in place throughout 2015. Having said this, we have seen a clear rejection at the $16.14 support level, spiking higher to create a long wicked hammer formation. This gives me the feeling that we could see some recovery in the short-term, despite it looking bearish overall. Should we see any bounce, I would expect it to be capped around $16.56. But ultimately I do expect us to see a move to $11.90 by the end of the week.

Brent spike likely to be short-lived
This morning has seen yet more consolidation, followed by a small spike higher. The price of Brent crude has seen days of consolidation now, with price action trading within a descending triangle. Ultimately we will need a move below $64.23 for the next leg lower, yet with this current move higher, I expect sellers to come back in at the resistance zone between $65.16 and $65.30. My bias remains bearish as I believe that $70 marks the top for this stage of the Brent crude recovery.

WTI candles spell indecision
Like Brent crude, WTI light has been consolidating following a selloff from the highs posted last week. However, unlike crude, we haven’t actually seen a break to create a new lower low. The support provided by the 20 day simple moving average and $58.81 level is holding for now and we need to see it close below that level for confidence of a move lower. Until then, I expect it to continue to range between $58.81 and $59.90. The breakout of that range will be crucial for direction.

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