Commodities Technical Round-up: Gold, Silver and WTI Drop

[MongiIG]

COMMODITY TECHS : GOLD (XAU/USD) , WTI CRUDE OIL AND SILVER (XAG/USD)

• Gold drops with the yearly low (1676) in its sights
• Silver breaks below key support to trade at fresh yearly lows
• WTI crude oil marks its second successive day of declines after facing rejection at the 50 SMA

 

GOLD DROPS, HEADING TOWARDS THE YEARLY LOW

Gold continues the longer-term downtrend with the latest drop below the August and September 2021 lows (1722). Over the medium-term however, price action has exhibited a tendency to move higher after printing the low in July which ultimately failed to break above the psychological 1800 level. With the 1800 level proving a tough nut to crack, a bearish engulfing set the tone for a continuation of the longer-term trend. last week's bullish pullback was halted at the 50-periodsimple moving average (SMA), resulting in four days of successive down days.

There is little in terms of near-term resistance until a retest of the yearly low at 1676.70 - a level that sits just above the full Fibonacci retracement of the 2020-2021 major move. However should we see any short-term fatigue in the current bearish move the 1722 level appears as resistance followed my 1755 add 1774.

The MACD indicator suggests that momentum is on this side of the bearish move while the RSI reveals that we do not yet trade at oversold levels.

Gold (XAU/USD) Daily Chart

Source: TradingView, prepared by Richard Snow

SILVER BREAKS BELOW KEY SUPPORT TO PRINT NEW YEARLY LOW

Like gold, silver also shows a continuation of the longer-term downtrend after failing to retest the zone of resistance around 21.40 - 22.10. This presented the first signal that the bullish pullback had run out of momentum, opening up a retest of the zone of support which includes the 61.8% Fib retracement (18.69) of the 2020-2021 major move; and the 2019-2020level of resistance (18.65).

The RSI indicator reveals that current price action is moments away from being considered ‘oversold’, which could see a near term pullback towards the zone of resistance, prior support. Play next level of support is the 16.95 level followed by the multi-year major support at 15.65.

Silver (XAG/USD) Daily Chart

Source: TradingView, prepared by Richard Snow

The weekly chart helps to add context to the key levels mentioned above, highlighting prior pivot points or levels that price action had previously respected.

Silver (XAG/USD) Weekly Chart

Source: TradingView, prepared by Richard Snow

WTI EXPERIENCING TWO-DAY SELL-OFF

WTI crude oil continues to show a lack of discernible direction as it continues to oscillate broadly between 85 and 95. Yesterday, price action completed a bearish engulfing which appeared right below the 50 SMA, sending prices lower in the London session thus far.

Oil now tests the 61.8 Fib retracement at 88.40 with further downside challenges at 85.75, followed by the 78.6% fib retracement at 78.60. In a previous report I looked at how the RSI indicator capped upside potential via its midpoint line is it had shown to be a reasonable indicator of upside exhaustion during the longer-term downtrend – which failed to hold this time.

Resistance appears at 93 followed by 96.44 and the 100 dollar psychological level.

WTI (CL1!) Daily Chart

Source: TradingView, prepared by Richard Snow

 

Aug 31, 2022 | DailyFX
Richard Snow, Analyst