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Gold is sitting on support but with the primary forces looking bearish further weakness is anticipated in the days ahead. The S&P 500 is carving out a rising wedge, which we’ll need to wait on but could soon provide a decisive move. The DAX is carving out an ‘RST’ pattern at a long-term area of interest, could mean another reversal lower is coming. Crude oil is at a long-term point of interest, keep an eye on how it reacts here with equity markets also possibly at an inflection point.

Technical Highlights:

  • Gold price looks set to trade lower soon
  • S&P 500 rising wedge continuing to form
  • DAX 30 ‘RST’ pattern on hourly chart
  • Crude oil at long-term point of interest

Make more informed decisions by checking out our trading forecasts and educational resources on the DailyFX Trading Guides page.

Gold price looks set to trade lower soon

Gold is having a hard time getting going after another swift decline. It is sitting on support, but if it doesn’t get into gear soon risk will quickly ramp up towards seeing price fall down to the August trend-line in the low-1260s. Watching 1285 and 1277. Keep an eye on silver at 14.70, could fall sharply if undercut.

Gold Daily Chart (breakdown looks to be nearing)

Gold daily chart, breakdown looks to be nearing

S&P 500 rising wedge continuing to form

The S&P 500 continues to trade higher but in narrowing fashion, which is creating a rising wedge pattern. These patterns are often regarded bearish following extended rallies, but we need to first wait for the pattern to break. A top-side breakout is at risk of failure, especially with record highs nearby. The ideal scenarios are either for a false breakout, then failure, or a break of the underside trend-line. But, again, need to wait for confirmation before running with a bias.

S&P 500 Daily Chart (rising wedge in development)

S&P 500 daily chart, rising wedge in development

DAX 30 ‘RST’ pattern on hourly chart

The DAX is trying to clear above long-term resistance on the weekly time-frame; the neck-line of the head-and-shoulders pattern back to 2017, 2011 trend-line, March ’18 low, and 200-day are all in the area. With this in mind, reversal risk is high for the week given the short-term ‘RST’ pattern most clearly seen on the hourly time-frame. The Reverse Symmetrical Triangle indicates indecision as the market carves out higher highs and lower lows, which after an advance can lead to a swift reversal.

How the next day or two plays out could be crucial. A pullback which quickly finds a low and then propels higher will negate the bearish implications of the pattern. However, if a pullback either develops with acceleration or fails to post a meaningful low that is later undercut, then it will confirm the topping nature of the pattern. In this case, we may very well have a failure on the weekly to recapture long-term resistance and could have more than short-term bearish implications.

DAX Weekly Chart (trading above resistance for now)

DAX weekly chart, trading above resistance for now

DAX Hourly Chart (‘RST’ pattern)

DAX hourly chart, 'RST' pattern

Crude oil at long-term point of interest

Crude oil is at the underside of the lower parallel from Feb 2016 and just above the 200-day. Allowing for a little wiggle room this is effectively confluence and thus making for a big area of resistance. Not to mention there is a slope from 1998 crossing under the 2009 low running in the vicinity. But just running with the more recent technical events, this is a spot of interest to watch oil turn down from. With stocks possibly putting in some type of topping sequence, it could be confluence between markets.

Crude oil Daily Chart (Big spot here)

Crude oil daily chart, big spot here

Resources for Index & Commodity Traders

Whether you are a new or an experienced trader, DailyFX has several resources available to help you; indicator for tracking trader sentiment, quarterly trading forecasts, analytical and educational webinars held daily, and trading guides to help you improve trading performance.

We also have a series of guides for those looking to trade specific markets, such as the S&P 500, Dow, DAX, gold, silver, crude oil, and copper.

---Written by Paul Robinson, Market Analyst

You can follow Paul on Twitter at @PaulRobinsonFX