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Trading Outlook: Gold in Precarious Position, Crude Oil Too

Trading Outlook: Gold in Precarious Position, Crude Oil Too

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Gold was looking good at one point last week on a daily basis until it reversed off the April high and put in a nasty weekly reversal bar. The point from which it developed was important – the 2011 trend-line. As we’ve been discussing recently, a weekly close above this long-term ‘line-in-the-sand’ is what is needed to truly confirm any break above it on a daily basis. This puts the 1260 area of support back in play. Hold or fold? A hold could still keep a confirmed long-term break in play, but we’ll look for a move above 1296 before getting too excited about any breakouts. Silver is clearly weaker than gold and if gold fails the 1260 level, the next spot up on the charts we looked at is ~16.25.

Crude oil is treading below the 47 level, with a small bearish rejection bar yesterday coming at a short-term trend-line. There is an hourly configuration which may offer an attractive set-up to enter short here very soon. Still eyeing sub-44 as the next likely spot for oil to find support.

Turning to equity indices, the picture is muddled across the board. The Nikkei broke back below support but isn’t gaining momentum lower, leaving us in a neutral state. The DAX is holding up, with the CAC 40 viewed as the index of the two to watch for direction. A nice triangle is forming in the French index, and with a break above the top-side trend-line the trend higher continues, while a break below the floor will expose the monster gap from the first round of the French elections. Soon we should have a resolution. The FTSE 100 is caught between top and bottom-side trend-lines, more choppy trade expected until one side or the other is clearly broken. The S&P 500 is holding a slope extending higher from November. The Nasdaq 100 broke hard Friday on a cautious Goldman Sach’s report regarding the mega-cap names in the index. The sharp break on the report looks more like a shot across the bow, and it seems unlikely GS nailed the top. Overall, still remain constructive on global markets until we see meaty downside price action persist.

For full technical considerations, please see the video above…

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---Written by Paul Robinson, Market Analyst

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.