Gold breaks lower, WTI crude oil breaks higher
Gold topped out just a couple of points from the 2015 high of $1306 at the start of May. I had thought a bull market correction would follow to offer a nice longer-term buying opportunity lower down. The chart below shows the more important 11-year trendline resistance, which did a pretty perfect job of halting this year’s strong recovery.
The strong US dollar reaction to the FOMC minutes last week has piled more pressure on gold as we have accelerated losses from $1260. I had expected gold to correct to somewhere between the first 23.6% Fibonacci support at $1243 and the intersecting triangle trendlines at $1234/33, as you can see in the daily chart below.
However I have been caught out by the continued losses as far as $1220 as I write on Wednesday. This is more negative than I had expected as we now target the 100-day moving average at $1213/$1212, but I would not be surprised to see gold test the March low and the 38.2% Fibonacci at $1208/06. We could even make it as far as the 100-week moving average at $1193/91.
WTI crude is rather a different story.
The July contract is trading higher as we continue the strong recovery from the January/February double bottom. Since the futures rolled from June to July, the price has pushed through last week’s high of $48.95 and on to $49.45 today.
Admittedly the July contract has not beaten its high from last week in the $49.29/56 area (as I write on Wednesday midday at least) but a break higher looks like it is on the cards for this week or next week, with no negative signals that I can spot despite overbought conditions.
On a break above $49.60 therefore I’m looking for the next targets of $49.70/75, $50.10/15 and perhaps as far as $50.90 into next week.
Technical Analyst & Trader
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