It's looking like crude oil prices are positioned to take a fall in the short-term, while gold is aiming for further gains following post-election declines.
A look at the last six months for WTI shows a pretty good number of reasons to be bearish. Since about the beginning of December we've been in a bearish pennant, with resistance around $54 reached at the turn of the new year and support now around $52, built around short-term lows throughout the last two months. This pennant is outlined in thin black lines. Tuesday's trading brought us very near a breakout point lower, with session lows right on the line of support on that pennant. What really matters is where we close, though.
Speaking of closing prices, WTI managed to close a hair above the 50-day SMA, prominently shown on the right panel of the above image. As of this typing, crude oil futures for March delivery are down roughly 1.1% to $51.59 a barrel, not only below Tuesday's close but also below Tuesday's session lows. This bodes well for Wednesday being our breakout point lower below the 50-day SMA line and possibly breaking the pennant as well, barring any positive shocks/news.
While crude oil looks for a break lower, gold is slowly but surely regaining ground lost after the election, when risk-off was the status quo. With that risk-off sentiment now abating as the new administration starts off on some shaky footing in some cases, gold is back in the crosshairs of investors. Long-term resistance was broken initially on Monday's close, and confirmed by Tuesday's open and close above that black resistance line.
I'm personally expecting the 'Trump trade' to continue slowing as the honeymoon phase ends and investors realize that significant tax reform and fiscal policy changes will not be immediate. This seems like a good time to jump into gold, so long as the dollar rally continues to stall along with the general Trump trade/risk-off sentiment.
Andrew
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| StockCharts.com |
Speaking of closing prices, WTI managed to close a hair above the 50-day SMA, prominently shown on the right panel of the above image. As of this typing, crude oil futures for March delivery are down roughly 1.1% to $51.59 a barrel, not only below Tuesday's close but also below Tuesday's session lows. This bodes well for Wednesday being our breakout point lower below the 50-day SMA line and possibly breaking the pennant as well, barring any positive shocks/news.
 |
| StockCharts.com |
I'm personally expecting the 'Trump trade' to continue slowing as the honeymoon phase ends and investors realize that significant tax reform and fiscal policy changes will not be immediate. This seems like a good time to jump into gold, so long as the dollar rally continues to stall along with the general Trump trade/risk-off sentiment.
Andrew
