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Today, we took a look at the long and short-term positioning of precious metals. Gold is making a serious attempt to trade above the 2011 trend-line which has been a big focus for over a year now. It’s above now, but still needs a convincing weekly or monthly close above to turn the longer-term trend higher. A rally above 1296 would go a long way towards turning the tides. For now, it is at risk of turning lower from here given where it is and the general chart structure on the daily over the past few months. Silver is at an interesting juncture here as well, and on a turn lower the 2003 trend-line below 15 remains the target.
The one-month inverse correlation between the US dollar and precious metals is about as close to -1 as it can get, and with the US Dollar Index (DXY) trading down into long-term support we could see it exert downward pressure should we soon see a rebound. With the correlation in mind, though, don’t become overly married to the relationship as it is likely to revert a bit from here given how extreme it has become. So, while generally the two will trade opposite, it may not do-so with to the same degree as recently.
Crude oil has exceeded upside expectations and if the see-saw price action we’ve seen in months past is to continue with a generally negative bias, it will need to turn lower very soon. There is a confluence of resistance with a trend-line and upper parallel converging. Should crude rally up into the mid-51s, then it will be testing a significant area of resistance, and while it would likely pull back initially it could start to tilt the overall chart higher.
Indices are a tough spot right now. The primary focus is on the bearish H&S formation in the DAX. The Nikkei, FTSE 100, and CAC 40 are all indices we watch but are staying away from for now. The S&P 500 has a short-term bearish formation on the hourly which could lead to a drop into support.
For full technical considerations, please see the video above…
Check out the Q3 Forecasts for our take on where markets are heading.
---Written by Paul Robinson, Market Analyst
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