The price of WTI Crude Oil closed the week of trading slightly below its starting point last Monday, and trading in the commodity remains under speculative pressure.
WTI Crude Oil finished the week of trading slight below its starting point last week.
If a speculator wasn’t participating they might simply look at the price of the commodity as having performed a very comfortable value line, but that isn’t the story.
The price of WTI Crude Oil began last week with normal choppy values but fell to a low of nearly 76.680 on early Wednesday.
Then the price of the commodity started to climb and by Thursday was flirting with a high around 79.420.
The price of WTI Crude Oil remained within the upper levels of its short-term range going into Friday, which then created a high around the 79.520 mark. However, after hitting the apex which retouched marks from the 2nd of May, WTI Crude Oil began to selloff going into the weekend. The strong selling as Friday concluded showed that large players were feeling comfortable with fundamentals which show adequate supply and a lack of hyperbole from the Middle East.
Back to Square One as WTI Crude Oil Opens this Week
Essentially WTI Crude Oil appears set to open Monday’s trading within vicinities it began last week’s trading. From a technical perspective the ability to turn lower as the weekend approached is significant and if the commodity opens tomorrow with a tranquil price range, this might indicate lower realms could still be demonstrated. Last week’s lows touched values last seen on the 11th of March. The 76.000 level appears to be important support for WTI Crude Oil.
If WTI Crude Oil continues to sell and falls below the 77.000 mark, traders will have their eyes on last week’s low. If the 76.600 support level is able to be penetrated lower it will open the door to technical consideration via prices that were seen from December into February. Lower prices may seem like wishful thinking for the public and speculators, but if supply and demand remain consistent with the levels being demonstrated currently a bit more selling to slightly lower depths is not out of the question.
WTI Crude Oil and Fair Market Value and Global Economic Intrigue
Global economies do seem to be improving slightly via economic data from Europe and China but very slowly, this as they seem to show signs of potentially stumbling out of recessionary pressures. But the U.S economy appears to actually be growing weaker and if this decline continues it will open the door to less demand for WTI Crude Oil.
Support near the 77.000 level should be watched early this week; if it is penetrated another push towards lows seen last week will likely become the target.
Having produced a selloff going into last weekend is intriguing, WTI Crude Oil should be watched early this week to see if momentum continues, but if there is a reversal higher on early Monday this may indicate some large players believe the commodity is slightly oversold.
WTI Crude Oil Weekly Outlook:
Speculative price range for WTI Crude Oil is 75.10 to 80.20
The trajectory of WTI Crude Oil has been lower since tracing above the 87.000 price in first and second week of April. The inability last week to seriously challenge the 80.000 value is another sign that technically traders may be comfortable with the current price range. Last week’s push higher from Wednesday into early Friday are a reminder that WTI Crude Oil can move higher and day traders wagering on the commodity need to be careful.
If political saber rattling from the Middle East can remain within calm decimal levels and not scare large traders of WTI Crude Oil, it is likely the commodity will remain within a rather polite price range. The 76.000 to 79.000 levels seem like a potential playing ground in the coming days. If the commodity is able to open with selling following last week’s soft close, there is a reason to suspect some additional selling may demonstrated. The technical range of WTI Crude Oil appears to be rather firm going into this week.
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Silver is outperforming Gold, so traders should be more confident of being long of Silver than of Gold.
The best new trade opportunity which might set up today will be a long trade in Silver from the $27.50 area.
Stock markets are mostly holding up, which is probably good news for further rises in Gold and Silver.
Gold (XAU/USD): Technical Analysis
Gold is still established within a long-term bullish trend despite retreating from its record high made just a few weeks ago. Bulls still need caution as the price is not trading in blue sky and is prone to hitting resistance and swinging lower. In fact, it is fair to say that we are seeing a consolidation within an increasingly narrow range, with both nearest support and resistance levels looking likely to produce rejections when tested, giving potential short-term trading opportunities.
A few hours ago, the price made what seems to be a significant bearish reversal at the resistance level at $2321. The price looks quite likely to fall further to $2305 where a long trade could be possible. If any rejection also rejects that round number at $2300 it will likely be even stronger.
Any long trade could easily run out of momentum near $2321 so be conservative with taking profits from any long trade – monitor it carefully.
Key Support Levels:
$2305
$2290
Key Resistance Levels:
$2321
$2329
Silver (XAG/USD): Technical Analysis
The price chart below shows that Silver is still established within a long-term bullish trend despite retreating from its multi-year high made just a few weeks ago. Recent hours have seen a significant bullish development: a bullish breakout above the resistance level confluent with the major quarter-number at $27.50.
A few hours ago, the price made a bearish reversal at the resistance level at $27.73. However, this does not look technical significant, and I would not be surprised if the price rises again to get established above that level.
A long trade here in Silver could be a great idea if we get a bullish bounce anywhere between $27.50 and $27.46, as this area was formerly well-established resistance so is likely now to act as strong support.
I see Silver as a better potential buy opportunity than Gold right now, but more conservative traders might prefer to wait for a bullish breakout above $27.75 instead of buying on the dip after a bounce near $27.50 or even lower.
Key Support Levels:
$27.50/46
$27.00
$26.84
$26.62
Key Resistance Levels:
$27.73
$28.05
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Gold and Silver are holding up relatively well despite the generally strong bearish reversals we have recently seen in commodity markets.
Silver is outperforming Gold, so traders should be more confident of being long of Silver than of Gold.
Neither precious metal looks like an immediate buy. It will probably be wise to wait for Silver to clear $27.50 or for Gold to clear $2330 before entering any new long trades.
Stock markets are generally rising again, which is probably good news for further rises in Gold and Silver.
Gold (XAU/USD): Technical Analysis
The price chart below shows that Gold is still established within a long-term bullish trend despite retreating from its record high made just a few weeks ago. Bulls still need caution as the price is not trading in blue sky and is prone to hitting resistance and swinging lower.
A few hours ago, the price made what seems to be a significant bearish reversal at the resistance level just below $2330. The price is currently sitting on the nearest support level at $2315 and looks quite likely to fall to $2308.
Silver is more bullish, but a long trade here in Gold could be a good idea if we get a bullish bounce at $2315, $2308, or even $2290. In the current technical circumstances where the price is not making any bullish breakouts, trading from bounces at support, even after a deep retracement, will likely be the best approach.
Silver (XAG/USD): Technical Analysis
The price chart below shows that Silver is still established within a long-term bullish trend despite retreating from its multi-year high made just a few weeks ago. Bulls still need caution as the price is not trading in blue sky and is prone to hitting resistance and swinging lower.
A few hours ago, the price made what seems to be a significant bearish reversal at the resistance level just below $27.50 which is a major quarter-number. The price is currently sitting on the nearest support level at $27.18 and looks quite likely to reject it, giving a possible long trade entry now.
A long trade here in Silver could be a good idea if we get a bullish bounce at $27.18, $27.00, or even $26.84. In the current technical circumstances where the price is not making any bullish breakouts, trading from bounces at support, even after a deep retracement, will likely be the best approach.
I see Silver as a better potential buy than Gold right now, but more conservative traders might prefer to wait for a bullish breakout above $27.50 instead of buying on the dip after a bounce at a key support level.
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Gold was all over the place during the trading session on Friday as the jobs numbers came out lower than anticipated.
Looking at the shorter term charts, the market had initially swung all the way up to the $2,323 level in the $2,275 level and then turned around to basically close in the middle of the day at the middle of the candlestick.
So, a lot of noise for no particular reason. It is interesting to note that we are right around the $2,300 level and that of course is an area that a lot of people will pay attention to as it is a large round psychologically significant figure.
That being said, if we can take out the top of the candlestick from the Friday session, I suspect that we may continue to see upward pressure. There are plenty of reasons to think that gold may continue to go higher, not the least of which, of course, is geopolitical concerns. Even if we broke down below the bottom of the candlestick for the day, then the 50-day EMA right around the $2,250 level and then eventually the $2,200 level, both could offer a significant amount of support.
External Pressures
Pay attention to interest rates, because if it looks like traders are betting on the Fed cutting rates sooner rather than later, that will also help gold. This is a chart that is very technically sound and despite the fact that we got thrown around quite a bit on Friday, the reality is, this is still a very bullish market.
Because of this, I have no interest whatsoever in trying to get short of the gold market, and most of my energy is focused on trying to find a decent entry point. Over the longer term, I would not be surprised at all to see the gold market go much higher, perhaps even reaching $2,500 given enough time. On the downside, even if we break down below the $2,200 level, I think there are plenty of buyers underneath it might jump into the market in trying to take advantage of “cheap ounces.”
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The price of WTI Crude Oil went from running into headwinds and lingering within the upper realms of its three month price chart to falling below important support levels rather quickly last week.
As the price of WTI Crude Oil opens this week it will be near the 77.930 USD ratios, which had last been traded in a meaningful manner on the 13th of March.
WTI Crude Oil which has been flirting with higher prices and testing resistance on a fairly regular basis a bit over the past month suddenly found selling pressure build.
When the 82.000 price level was penetrated lower on Tuesday, momentum didn’t slow down and the 81.000 target began to come into sight and by Wednesday this level was brushed aside too.
Wednesday’s trading in WTI Crude Oil saw a fall from slightly above 81.000 to the 79.000 mark emerge. And downside pressure was not finished yet, Thursday and Friday did produce slight reversals higher, but selling continued and the 80.000 price level looked further away as traders began to close their offices for the weekend.
Supply Remains Abundant and WTI Crude Oil is Tranquil
While the media continues in many cases to shine a light on the Middle East conflict, experienced energy traders have proven they are tranquil and are paying attention to fundamentals which show Crude Oil remains abundant and no shortages are present. While peace in our time has not been achieved, developments from the Middle East didn’t stir speculative fires this past week.
The downturn in U.S GDP numbers last week may have also played a role in the ability of WTI Crude Oil to produce a price decline. Large players may be more cautious about pursuing long positions if they feel the U.S economy is about to enter a bona fide downturn.
Production Levels and Looking Ahead Technically
While inventory of WTI Crude Oil remains efficient and supply from the large producers is flowing, some analysts are pointing out that OPEC while conducting its next meetings could make changes to their production in order to combat the faltering prices. However, traders should understand the OPEC meetings aren’t until the 1st of June and until then production levels are not going to be changed dramatically. The question now for WTI Crude Oil is if it will sustain values below 80.000 USD in the coming days.
Traders with a taste for selling will have to pull out three month technical charts to observe depths last traded in the second week of March.
While the 77.000 realm below is certainly important, the price of WTI Crude Oil may start to test a choppy range between 77.000 and 79.000 over the near-term.
The ability to trade lower with rather considerable price velocity last week is newsworthy and speculators should monitor the start of WTI Crude Oil trading this week to gauge existing behavioral sentiment.
WTI Crude Oil Weekly Outlook:
Speculative price range for WTI Crude Oil is 75.200 to 82.600
If the 77.250 mark below starts to get tested and movement sustains lower depths this could set off a rather intriguing speculative battle. Any trading below the 77.000 mark could set off alarm bells and cause technical traders to consider lower values seen via six month charts. Before WTI Crude Oil traders say anything below 75.000 USD is too low, they should remember that the commodity was actually testing values below the 70.000 realm on a fairly consistent basis from mid-December until the start of the second week of January.
The trend lower in WTI Crude Oil which has been produced since the middle of April also coincides with nervousness regarding USD trading apexes and concerns about the U.S economy. Yes, reversals could certainly be seen in WTI Crude Oil, traders cannot bet on a one way direction to unfold. However, resistance above after getting tested in the coming days, may present an opportunity to sell WTI Crude Oil for speculators who manage their risk taking tactics well and believe downside pressure is stronger.
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The German DAX has rallied just a bit during the early hours on Thursday as it looks like we are trying to recover a bit.
The 18,000 euros level is an area that obviously will attract a lot of attention due to the fact that it is a large, round, psychologically significant figure, but it’s also an area where we have seen some noise previously.
The market at this point in time continues to see the 50 day EMA underneath as potential support.
In this type of environment, I think we continue to see a lot of consolidation as we try to sort out which direction we are going in the longer term.
Trend is Still Positive
The DAX is bullish overall, but I think also this is a situation where if we can break the candlestick from the last couple of days then we could go looking to the 18,500 euro level. Underneath the 50-day EMA there is a lot of support that we’ve seen recently so I’m not interested in shorting this market anytime soon.
That being said, the 17,500 level is an area that I think a lot of people will be paying attention to because if we were to give that up, then the uptrend could be threatened. Keep in mind the DAX is the gateway to Europe for most traders so they will look to it as a place to put money to work initially. In that sense, you can look at the DAX as a harbinger of what happens on the rest of the continent such as trading in the MIB in Italy or the AMX in Amsterdam etc. At this point it looks like we’re trying to beat back some of this negativity, but I think we’ve got some choppy and volatile days ahead
When you get this type of choppy volatility, you are better off using small positions, but given enough time I do think that we continue to see an attempt to rally. If we don’t rally in this market, and start to break down, then the real trade would be to short some of the smaller European indices.
S&P 500 Forecast: Continues to Consolidate (SIGNAL)
Potential signal: if we break above the top of the wipeout candlestick from Tuesday, near the 5140 level, I would be a buyer and go looking toward the 5275 level. Underneath, the 5000 level would be my stop loss.
Ultimately, this is a market that I do think has a lot of support underneath it, but the 5000 level is an area that I think he is psychologically important as well as potentially structurally supportive as well. In fact, I think it’s an area of support that extends down to the 4925 level.
The 50-Day EMA sits just above, offering a certain amount of resistance. If we were to break above there, then the market is likely to go looking toward the 5125 level. Breaking above that level opens up the possibility of a move toward the 5300 level, but we would need to see some type of momentum in the market. That being said, it’s probably only a matter of time before Wall Street finds a reason to start pushing a bullish narrative again.
Interest Rate Markets and Jobs
Friday is the nonfarm payroll announcement, and that of course will have a major influence on what happens next. Ultimately, which you need to watch is interest rates coming out of the 10 year note in the United States, because that’s the only thing that Wall Street cares about, whether or not it is going to get cheap money. This has absolutely nothing to do with the economy, because as an American I can tell you that things are getting rapidly more expensive. Wall Street is worried about getting cheap money to push around and take advantage of liquidity.
This is a bit ironic, considering we are in the midst of earning season, but quite frankly earnings have nothing to do with what happens with the stock. That’s like assuming that stocks have something to do with the economy. It’s a transmission of liquidity like it has been since the Great Financial Crisis. This is a market that is currently trying to sort out whether or not it has enough liquidity to support it. If it does, it will rise. If it does not, it will fall. At this point, I think the only thing you can count on is a lot of noise.
Nasdaq 100: Sandwiched, Watch US 10-Year Treasury Yield Next
Nasdaq 100 has exhibited short-term intraday wild gyrations of 3% to 4% in opposite directions since last week.
Today’s data focus will be on US non-farm payrolls and ISM Services PMI for April to offer clues on whether the stagflation risk narrative is still alive.
Macro factors such as the movement of the US 10-year Treasury yield are likely to take over the driver’s seat over micro factors (earnings results) in the next two weeks.
Key levels on the US 10-year Treasury yield to watch are 4.70% (above, likely to be bearish for Nasdaq 100) and 4.58% (below, bullish bias for Nasdaq 100).
Since our last publication, the Nasdaq 100 has continued to inch lower from its current all-time high level of 18,465 printed on 21 March 2024. It has just ended April with a monthly loss of -4.46%, its worst monthly performance since September 2023 after its prior five consecutive months of positive returns.
So far it has recorded a maximum drawdown of -8% from its current all-time high to the recent 19 April 2024 low of 16,974, and current episodes of minor rebounds in price actions have been rejected by the downward slopping 20 and 50-day moving averages; the hallmark of a potential on-going medium-term corrective decline sequence within its longer-term major uptrend phase.
On a shorter-term intraday basis, wild gyrations between a range of 3% to 4% in opposite directions have been seen on the Nasdaq 100 due to several significant risk events, and data releases that unfolded this week, two of the “Magnificent 7 group of mega-cap US stocks earnings results (Amazon and Apple), US ISM Manufacturing PMI, US Treasury refunding requirements, and the FOMC monetary policy meeting.
These events and data sets offered conflicting signals on the state of the US economy; stagflation risk is still alive but negated by the Fed’s upcoming Quantitative Tightening (QT) taper initiative to kickstart in June where the monthly amount of US Treasuries roll-off in the Fed’s balance sheet will be reduced to US$25 billion from US$60 billion.
Hence, the QT taper initiative has offered a relief to potentially cap any adverse liquidity squeeze in the US financial system that can trigger a spike in short-term and overnight interest rates as a lesser amount of banks’ reverses may be needed to fund the US Treasury general account (TGA) as the amount in the Fed’s overnight reverse repos facility (the primary source of funding for TGA replenishment since September 2023) has dwindled to almost zero (US$428.68 billion as of 2 May 2024) from a peak of US$2.55 trillion in December 2022.
Watch US NFP & ISM Services PMI for more clarity on the state of the US economy
There will be two more key pieces of economic data to digest before we end this hectic and volatile week, US non-farm payrolls for April where there may be a risk of upside surprise as consensus expectations have been lowballed to +181K jobs added after a surprise rosy print of +232K jobs in March. April’s ISM Services PMI on the health of the US services sector will be out later; still in an expansionary mode (above 50 reading) but the pace of expansion has slowed since the start of the year with last month’s March print of 51.1 versus 53.4 seen in January. If April’s number comes in below expectations of 52 and March’s 51.1, the stagflation risk narrative is likely to gain traction again.
US 10-year Treasury yield may dictate Nasdaq 100’s next intermediate moves
A clearance above 4.70% resistance on the US 10-year Treasury yield (inverted) may trigger another potential downleg in the Nasdaq 100 with its key medium-term support zone coming in at 16,560/290 (also the 200-day moving average).
On the flip side, a break below 4.58% near-term support on the US 10-year Treasury yield (inverted) is likely to see a continuation of the rebound on the Nasdaq 100 from the19 April 2024 low to expose the next intermediate resistance at 17,900
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