Commodities at Critical Juncture
All charts are courtesy of Stockcharts.com
Pressure is building for Gold. The chart shows a pattern of higher lows and a horizontal resistance line just below the $1,000 level, thus forming a triangle pattern. The normal market response would be a breakout to the upside because the bulls are getting more and more eager to step in (higher lows).
The 17 w. MA together with the blue should act as a decent support and offer Gold the time to gather enough strength for the final push above the magenta neckline. As mentioned in an earlier update this reversed H/S pattern triggers a price target for Gold at $1,300.
For now the outlook remains fairly positive, however there are some negative warning signs showing up in the chart: negative divergence in the RSI and the MACD which hints at an upcoming change in the trend. The change in trend signal will become stronger if the RSI and STO both fall below the 50 level with Gold falling below the 17 w. MA and the blue support line.
If the negative outlook comes to pass a fall towards the $700 is very likely.
The Silver chart deteriorated a bit with Silver falling and closing below the 17 w. MA. For now the blue channel line supports Silver but the uptrend is in danger of breaking down.
We have to watch the blue support line and especially the 34 w. MA very closely, a fall below them is a big sell signal that triggers a new decline. The technical indications in the chart are all hinting towards this negative scenario so caution is warranted.
Oil is acting perfectly as expected in earlier updates, it reached the resistance zone and the chances for a small correction are very high. Oil rose from around $35 to $74, an advance of over 100%. After such a rise a correction is logical to expect especially with the overhanging resistance zone. A back test of the 17 w. MA (currently at $60) would bring Oil back towards the support zone but because this MA is rising we could see Oil making a bottom in the mid 60-ties.
Once this step back occurs and the 17 w. MA holds up Oil should be ready for a jump over the resistance zone.
However, should Oil manage to break the resistance zone from the current levels we can be in for a very quick rise towards the resistance at $90 first before any significant correction occurs.
The negative forces in the $ keep building. The overall trend changed from up to down when the 17 w. MA fell below the 34 w. MA.
The bulls however are trying hard to establish a bottom around the 80 support level despite the fact that the technical signals keep deteriorating. It looks like the effort of the bulls to establish a bottom is failing. They managed to push the $ back towards the resistance line but lacked the strength for a break. Currently the support at 80 is under fire and chances are mounting that a breakdown will occur. Such a break could lead to a wave 5 lower and will target the next support level just below 78 again.
As expected Copper reached the resistance zone and it looks like the 5 wave pattern could have been completed. However the last two candles in the chart could point to an alternate labelling of the presented waves, one that puts the wave 5 at a much higher level.
In this case the 5 would also exist out of a 5 wave pattern with the 1,2 maybe in place and the 3,4,5 still to come. This alternate wave count could bring Copper as high as 280 to 300.
This alternative wave count will fall into place once Copper exceeds the wave 5 high and the resistance at 240.