Tuesday Technical Update: Gold & Crude Oil
$GLD, $USO, $OIL
On Crude Oil
Crude Oil retreated after Monday’s rally which was in line with the strength in the stock markets. While last week’s output freeze deal might have helped the action a bit, the Key was really a Short Squeeze.
The front-month WTI Crude Oil contract initially rose to 32.05, a level not seen in more than 2 weeks, before ending the day at 31.48, +6.21%.
The Brent Crude contract climbed to as high as 34.97 before settling at 34.69, +5.09%.
Wall Street strengthened with DJIA and S&P 500 indices gaining +1.39% and +1.45% respectively banging up against heavy resistance and fading.
Tuesday, however, shares in Asia today failed to extend the gains in the US as energy prices retreated.
The bigger picture
The medium term down trend in Crude Oil is still in place with fall from 107.73 as the 3rd leg of the pattern from 147.27 high. 33.2 Key support, the Y 2009 low, was broken and there is no clear sign of bottoming in here.
Current decline might extend to 61.8% Fibo projection of 107.73 to 42.03 from 62.58 at 21.98.
Nonetheless, 17.12/37.00 is still seen as a Key long term support zone and Crude Oil will find it hard to dive lower inside this region.
Start to look for bottoming signal below the psych mark at 30. My Bearish outlook remains as long as the Key resistance at 50.92 holds.
The long term picture
Crude Oil is in a long term consolidation pattern from 147.27, no change here.
While current down trend might extend lower, expect strong support from the 17.12/37.0 support zone to contain the Southside action.
NYMEX Crude Oil Continuous Contract 4 Hours
NYMEX Crude Oil Continuous Contract Daily
On Gold
As long as 1181.6, the minor support holds, near term outlook in Gold is Bullish and expected to run to 1307.8 next.
But, a break of the minor support at 1181.6 will confirm short term topping and bring on consolidations and possibly deeper pull back.
The bigger picture
The current development suggests a medium term bottom has formed at 1045.4. Rebound from there is expected to extend to test the Key resistance at 1307.8.
A firm break at 1,307.8 is needed to confirm trend reversal.
Otherwise, treat price actions from 1045.4 as developing into a medium term sideway pattern.
A strong break of 1307.8 should bring a rise to a 38.2% Fibo retracement of 1923.7 to 1045.4 at 1380.9.
The long term picture
Gold is limited below 55-Month MA and the correction from 1923.7 is still in favor to enter 681/1033.9 support zone, with 61.8% Fibo retracement of 253.2 to 1923.7 at 891.3 inside.
But, a clear break of 1307.8 then argues that Gold has got strong support from 1033.9 and the pattern from 1923.7 would extend sideways looking for the next leg North..
COMEX Gold Continuous Contract 4 Hours
COMEX Gold Continuous Contract Daily
If you are a participant in these markets, tune out the noise.
Have an happy day…
Paul Ebeling
HeffX-LTN
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