Crude Oil, Gold, Silver, Technical Analysis, Retail Trader Positioning - Talking Points
- Commodities and precious metals may rally on more short bets
- Crude oil aiming for February 2020 highs, watch its momentum
- Gold and silver prices are underpinned by bullish ‘Golden Cross’
In this week’s webinar on IG Client Sentiment (IGCS), I discussed the outlook for commodities and precious metals such as crude oil, gold and silver in the context of the US Dollar. IGCS is typically a contrarian indicator. For a more in-depth analysis of where these assets may go, including coverage of fundamentals, check out the recording of the session above.
Crude Oil Sentiment Outlook - Bullish
The IGCS gauge implies that roughly 33% of retail traders are net long crude oil. Upside exposure has increased by 60.63% and 41.02% over a daily and weekly basis respectively. The combination of current sentiment and recent changes offers a stronger bullish contrarian trading bias.
Crude Oil Technical Analysis
Crude oil prices may be taking aim to extend gains in the near term. Prices have closed above the 49.42 inflection point from early February 2020, exposing the 54.45 high from the same month. A bullish ‘Golden Cross’ is also underpinning the case to the upside from the 50-day and 20-day Simple Moving Averages (SMAs). However, negative RSI divergence does show fading upside momentum, a sign of caution.
WTI Daily Chart
Crude Oil Chart Created in Trading View
Gold Sentiment Outlook - Bullish
The IGCS gauge implies that about 75% of retail investors are net long gold. Downside exposure has increased by 7.46% and 40.74% over a daily and weekly basis respectively. Recent changes in sentiment warn that the current price trend may soon reverse higher despite the fact traders remain net long.
Gold Technical Analysis
Gold prices are aiming to test the 1959 – 1973 resistance zone following the confirmatory break above the falling trendline from August. Recently, a ‘Golden Cross’ emerged, pointing to the potential for more upside progress. In the event of a turn lower however, keep an eye on rising support from late November.
XAU/USD Daily Chart
Gold Chart Created in Trading View
Silver Sentiment Outlook - Bullish
The IGCS gauge implies that about 89% retail traders are net long silver. Downside exposure has increased by 13.03% and 19.56% over a daily and weekly basis respectively. Recent changes in sentiment warn that the current price trend may soon reverse higher despite the fact traders remain net long.
Silver Technical Analysis
Silver prices confirmed a break above the 61.8% Fibonacci retracement at 26.7315 – see daily chart below. That has exposed the 78.6% level at 28.1087 in the aftermath of prices taking out the falling trendline from early August. Here too a ‘Golden Cross’ is underpinning the case to the upside.
XAG/USD Daily Chart
Silver Chart Created in Trading View
*IG Client Sentiment Charts and Positioning Data Used from January 5th Report
--- Written by Daniel Dubrovsky, Currency Analyst for DailyFX.com
To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter
