Gold and Crude Oil: A Quick Look

by Wahyu PY on March 1, 2013

There were some requests from readers to follow-up on a previous post on Gold and some bigger picture comments on Crude. Pls see below for a quick analysis in broader terms that might help in generating some trade ideas. If you are looking for trade ideas, try our Income from future options service FREE for 15 days.

GOLD


More than a year ago, Gold prices hit all-time high around 1920 USD per troy oz (Sept 2011) and have been consolidating ever since, ranging mostly between 1520 and 1800 regions. Looking back at the consolidation period since early 2012, Gold prices seems to be very well supported around 1560 regions, below which Gold prices will get a strong buying pressure that will push the price back higher. The lowest level recorded since the all-time high was on May last year at 1527 regions.

Back in October last year, we saw a retest of resistance level around 1800 regions, followed by a bearish trend which bring Gold prices to below 1560 regions last week with a quick rebound. I think the recoil from 1560 level is quite solid and though there may be another lower retest, Gold prices will need a very strong momentum down to break the support zone that extends to at least 1530 regions.

Going forward, Gold prices are likely to consolidate with slight bullish bias. Breaking above 1620 regions may signal a possible bullish rally to 1800, but I think Gold prices will need to build momentum first, just like what happened in June and July last year. This however will be invalidated once Gold prices pierce strongly below 1500.00 level, which I doubt will be the case.

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WTI CRUDE OIL


There are several benchmark for Crude Oil prices, but the two most important ones are the West Texas Intermediate (WTI) and Brent Crude Oil. WTI Crude Oil is used mostly within U.S. and Brent Crude Oil is mainly used by European market. In terms of specification, both are considered as high-grade light-sweet crude oil, although WTI is of higher standard (and interestingly cheaper prices).

Recently the price movement of WTI Crude has been a ride of roller-coaster, with high level of volatility and lots of impact from the fundamental factors. However, from long-term perspective, both technical and fundamental, WTI Crude prices are consolidating and balanced by several factors like global economic slowdown and geopolitical tension in Middle East.

Currently WTI Crude prices are strongly capped by resistance at 98 regions, with the next resistance at 100 serving as psychological barrier and a strong glass ceiling for bull. Furthermore, we saw a strong bearish move last week after few weeks of consolidation with the resistance at 98 regions left intact, giving a stronger argument for bearish momentum in play, with downside potential may likely hit 88 regions.

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