Jump to content

Gold and Crude Oil Price Outlook: Will Prices Fall on Key Contrarian Signals?


MongiIG

Recommended Posts

GOLD, CRUDE OIL, TECHNICAL ANALYSIS, RETAIL TRADER POSITIONING - TALKING POINTS

  • Retail traders continue betting gold and crude oil may rise
  • From a contrarian standpoint, will this bode ill for them?
  • XAU/USD eyeing key trendline, WTI downtrend in focus
Blog Archives - Best Forex Broker | Trusted Broker | CMS Prime

Taking a look at IG Client Sentiment (IGCS), retail traders are predominantly betting that gold and crude oil prices may rise. In other words, they are net-long XAU/USD and WTI. IGCS can at times be a contrarian indicator. If this trend in positioning continues, gold and crude oil prices could be at risk down the road. However, are near-term changes in positioning aligning with the broader outlook?

GOLD SENTIMENT OUTLOOK - BEARISH

The IGCS gauge shows that roughly 84% of retail traders are net-long gold. Since the majority of traders are biased higher, this suggests that prices may continue falling. Compared to a day and a week ago, traders have boosted upside exposure by 6.76% and 6.90% respectively. With that in mind, the combination of overall and recent changes in positioning offers a stronger bearish contrarian trading bias.

Gold and Crude Oil Price Outlook: Will Prices Fall on Key Contrarian Signals?

TECHNICAL ANALYSIS

Gold prices are testing a potential rising trendline from early August. A breakout below it could hint at extending losses since November. This is as a bearish crossover occurred between the 20- and 50-day Simple Moving Averages. On the downside, 61.8% Fibonacci retracement at 1756 is in focus, followed by the 1721 – 1729 support zone. Immediate resistance seems to be the 38.2% retracement at 1802.

 

GOLD DAILY CHART

Gold and Crude Oil Price Outlook: Will Prices Fall on Key Contrarian Signals?

Chart Created in Trading View

Crude Oil Price Update - Contrarian View: Deluge of Bullish Articles Tips  Market Lower

CRUDE OIL SENTIMENT OUTLOOK - BULLISH

The IGCS gauge shows that about 70% of retail traders are net-long crude oil. Since most traders are net-long, this suggests that prices may continue falling. However, upside exposure has decreased by 5.94% and 10.51% over a daily and weekly basis respectively. With that in mind, the combination of overall and recent changes in positioning are hinting that crude oil may soon reverse higher.

 

Gold and Crude Oil Price Outlook: Will Prices Fall on Key Contrarian Signals?

TECHNICAL ANALYSIS

Crude oil prices remain in a near-term downtrend since prices peaked in October. A bearish ‘Death Cross’ remains in play between the 20- and 50-day SMAs, offering a downward technical bias. This is as prices consolidate around the 200-day line. Resuming the downtrend entails clearing the 65.10 – 66.39 support zone, exposing the August low at 61.76. On the flip side, pushing above the 20-day SMA and the midpoint of the Fibonacci retracement – at 73.57 – could open the door to a reversal higher.

WTI DAILY CHART

Gold and Crude Oil Price Outlook: Will Prices Fall on Key Contrarian Signals?

Chart Created in Trading View

*IG Client Sentiment Charts and Positioning Data Used from December 14th Report

Written by Daniel Dubrovsky, Strategist for DailyFX.com. 15th December 2021.

Link to comment

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
  • General Statistics

    • Total Topics
      21,239
    • Total Posts
      90,835
    • Total Members
      41,340
    • Most Online
      7,522
      10/06/21 10:53

    Newest Member
    KeithH61
    Joined 03/02/23 08:43
  • Posts

    • The Trader Desk Inc., Elliott Wave Technical Analysis The Trader Desk Inc., (TDD:NASDAQ): Daily Chart, 3 February 23, TDD Stock Market Analysis: Looking for an impulsive move off the lows as we are seeing a steepclimb that broke through the 200EMA and the volume based point of control TDD Elliott Wave Count: Wave {iii} of 1. TDD Technical Indicators:Above all averages. TDD Trading Strategy:Looking for wave {iv} to enter long. TradingLounge Analyst: Alessio Barretta Source : Tradinglounge.com get trial here!   The Trader Desk Inc., TDD:1-hour Chart, 3 February 23, The Trader Desk Inc., Elliott Wave Technical Analysis TDD Stock Market Analysis:We can count five waves off the lows in wave {i} as well as fivewaves into wave {iii}. We could be near the end of (v), 2.618% {iii} vs. {i} could be the nextresistance. TDD Elliott Wave count: Wave (v) of {iii}. TDD Technical Indicators: RSI in overbought territory as well as well above the averages. TDD Trading Strategy:Looking for wave {iv} before placing longs.
    • S&P 500, Nasdaq 100 and Dow rally ahead of US non-farm payrolls Outlook on S&P 500, Nasdaq 100 and Dow ahead of Friday’s US non-farm payrolls. Source: Bloomberg      Axel Rudolph FSTA | Senior Financial Analyst, London | Publication date: Friday 03 February 2023  S&P 500 rallies to critical technical resistance post Fed rate hike The S&P 500 accelerated to the upside and on Thursday rallied above its September and December highs at 4,139 to 4,155 - which represent key resistance – but then slid back and closed marginally above this area as Apple sales dropped by 5% in their largest quarterly decline since 2016. If the S&P 500 were to have another daily close above 4,155 this Friday and by definition then a weekly close, especially after the US non-farm payroll data, the August peak at 4,325 would be next in line. En route lies the late August high at 4,215. Minor support below 4,139 can be found between the early December and January highs at 4,101 to 4,094, below which the breached one-year downtrend line can now be seen at 4,037. While Tuesday’s low at 3,994 isn’t being slipped through, the 2023 uptrend remains intact. Source: ProRealTime Nasdaq 100 rallies despite gloomy outlook by US tech giants In case of the Nasdaq 100, a bottom has already been confirmed by Wednesday’s close above the November and December highs at 12,084 to 12,258, with the September peak at 12,902 nearly having been reached before disappointing results by tech giants such as Apple, Amazon and Alphabet drove the index lower. With all three companies offering a gloomy outlook in their quarterly results, a further retracement lower may be seen on Friday. Having said that, the technical bullish view will remain valid as long as investors continue to expect that the Federal Reserve’s (Fed) tightening cycle may be nearing its peak and while Tuesday’s low at 11,817 isn’t being slipped through or a clear technical bearish reversal signal is being given by the index. A rise above the 12,902 September high would put the August peak at 13,722 on the map. Source: ProRealTime Dow continues to be this year’s US underperformer Only the Dow Jones Industrial Average is underperforming and is finding it difficult to advance, having on Wednesday failed around its January high. The index continues to range trade within its 34,941 to 32,474 December extremes but does remain short-term bullish while this week’s low and the October-to-February uptrend line at 33,512 to 33,490 underpin on a daily chart closing basis. Having said that, a rise and daily chart close above the January and February highs at 34,346 to 34,348 needs to be seen, for the December peak at 34,941 to be back in the frame. Failure at this week’s low at 33,490 would have short-term negative implications. Source: ProRealTime
    • Early Morning Call: Nasdaq and S&P 500 enter bull market The Nasdaq and S&P 500 entered bull market yesterday as investors now consider rates to be close to peak levels.  Jeremy Naylor | Writer, London | Publication date: Friday 03 February 2023  Equity market overview APAC equity markets were mixed overnight. Hong Kong and China mainland indices were the underperformers, despite positive data. Caixin services PMI climbed back up in expansion territory, after four months below the 50 mark. The index rose to 52.9 in January, from 48 in December. European indices opened higher this Friday, remaining on their upward trend after the Bank of England (BoE) and European Central Bank (ECB) decided on interest rates. As expected, both central banks raised rates by 50 basis points yesterday. The BoE's main interest rate is now at 4% and the ECB's main refinancing rate stands at 3%. And as expected, messages from the respective governors were different. BoE governor, Andrew Bailey, said the tightening in pace since the end of 2021 is likely to have an increasing impact on the economy. This should help bring inflation to around 4% in 2023. Previously the BoE's economic projection showed inflation at around 5% this year. "Since the November monetary policy report we've seen the first signs that inflation has turned the corner," said Bailey in his comment following the decision, but added that "it's too soon to declare victory just yet, inflationary pressures are still there." As for the ECB, it explicitly signalled at least one hike of the same size at its next meeting in March. "... the Governing Council intends to raise interest rates by another 50 basis points at its next monetary policy meeting in March and it will then evaluate the subsequent path of its monetary policy," the ECB said. And Christine Lagarde insisted at the press conference: "We know that we have ground to cover, we know that we are not done". In the US, Nasdaq and S&P 500 entered bull market yesterday as investors now consider that rates may be close to peak levels. The US dollar recouped Wednesday's losses sending gold back down to the low $1,900. Yet, the dollar basket could still record a fourth straight weekly loss. It now all rests on January’s non-farm payrolls data. Economists anticipate 185,000 job creations, following 223,000 in December. The unemployment rate should rise one notch to 3.6%, and average hourly earnings 0.3% month-on-month (MoM) and 4.3% year-on-year (YoY). A bit later at 3pm, ISM services PMI for the month of January is expected to rise to 50.4, after 49.6 in December. Earnings Apple pared earlier gains last night after the company's fiscal first quarter (Q1) earnings. The group posted earnings of $1.88 per share, a 10.9% drop compared to the same quarter last year. Analysts had expected $1.94. Revenue fell by 5.5% to $117.15 billion, the first year-over-year sales decline since 2019. $121.88Bln was expected. In detail, iPhone and Mac revenue came in short of estimates, down 8.2% and 28.6% respectively. iPad revenue rose 29.7%, above forecasts. Apple CEO Tim Cook said three factors impacted the results: a strong dollar, production issues in China affecting the iPhone 14 Pro and iPhone 14 Pro Max, and the overall macroeconomic environment. Amazon shares were quite jittery in extended trading last night. The internet giant missed earnings estimates, posting earnings per share (EPS) of three cents, compared to 17 cents forecast by analysts. Revenue was better than expected: $149.2bn versus estimates of $145.8bn. Investors were taken aback by the group’s guidance. Amazon said its operating profit could fall to zero in the current quarter as savings from layoffs do not make up for the financial impact of consumers and cloud customers clamping down on spending. Amazon forecast it would earn between $0 and $4 billion in operating income this quarter, compared with the $4.04 billion that analysts were expecting. Additionally, the company believes sales growth in its long-lucrative cloud business will slow for the next few quarters. In Q4, Amazon Web Services sales reached $21.3bn, versus $21.76bn expected. Alphabet missed on both top and bottom lines for its Q4. Google's parent company posted earnings of $1.05 per share, on revenue of $76.05bn. Analysts anticipated EPS of $1.18 and $76.53bn in revenue. Alphabet suffered from a pullback in advertising revenue. Advertisers have cut their budgets as rising inflation and interest rates fuelled concern over consumer spending. The company said it would take a charge of between $1.9 billion and $2.3 billion, mostly in the first quarter of 2023, related to the layoffs of 12,000 employees it announced in January. Ford Motor reported lower than expected earnings. Ford posted earnings of 51 cents, compared to analysts' expectations of 62 cents. Revenue came broadly in line with expectations, at $41.8bn. Ford predicted a difficult year ahead, blaming chip shortages and other supply chain issues, production "instabilities" that raised costs, along with lower-than-expected volumes. In 2022, the company recorded an adjusted profit of $10.4bn, short of Ford's own forecast of $11.5bn. Ford expects 2023 adjusted pretax earnings of $9 billion to $11 billion.   This is here for you to catch up but if you have any ideas on markets or events you want us to relay to the TV team we’re more than happy to.
×
×
  • Create New...