WTI price weakens as gold price starts to find support

Gold starts to find support following recent declines, while WTI shows tentative signs of a potential bearish reversal ahead of June contract end.

Gold finds support after retracement into trendline support

Gold declines have taken us into an ascending trendline support once more, with the price appearing to respect it thus far. The wider gold outlook does provide a clear pattern of higher lows which is likely to continue despite the recent losses.

With that in mind, this deep retracement (61.8%-76.4%) does provide a potential bullish reversal point for this market. However, if we did move lower, such downside would likely be a short-term move into a deeper retracement. Thus a bullish outlook is in place unless the price breaks below the $1670 low.

WTI starts to show signs of weakness

WTI has seen an incredible rise throughout the past fortnight, with the drama of 21 April seemingly a distant memory. However, traders should be very aware of the possibility that we see fireworks once again at the end of the June contract (18 May). With the threat of another inventories-driven slump in WTI on that date, there is a good chance we start to see the prices reverse lower in the lead up to that event.

The price action seen thus far this week has shown a move out of the recent ascending channel, with the price currently drifting lower. There is no guarantee that the bearish sentiment takes hold from here, yet we are at least starting to show a sign that people see these levels as being potentially overly optimistic given the impending crunch in 11 days’ time. With that in mind, watch for a potential move lower from here, with a rally through $2658 required to signal a continuation of the recent uptrend. Until then, there is a good chance we could see the bears start to gradually find a foothold once more for WTI.

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