#Gold and #WTI #CrudeOil Forecast (31 MAY 2022)
Gold Forecast: Quiet Session on Monday
Make sure that you build up your position slowly.
Gold markets were quiet on Monday, which should not be a huge surprise considering that it was Memorial Day in the United States, and futures trading was somewhat limited. Because of this, I would not read too much into the candlestick other than that the market is hanging around the 200-day EMA yet again. We are in an area where the market will have to decide its next move rather quickly.
The 50-day EMA is above the $1875 level and dropping. Because of this, I think there is still a significant amount of technical pressure on this market, but ultimately, we have to determine where we are going next. Alternatively, this is a market that I think will have a lot of noise attached to it as the interest rates in America have been all over the place. Recently, they have been falling, but I think that traders are starting to jump into the bond market for safety, so I would not read too much into it. Because of this, a pullback is very possible, and if we were to break down below the $1850 level, I suspect that we may have to reset. The $1800 level underneath should be an area where a lot of support could be found, so as long as we stay above there, we have the possible making of a longer-term uptrend. However, if we give up that area, it could get ugly rather quickly.
If it moves like that, it would almost certainly have to do with the US dollar spiking and value. I do think that both gold and the dollar can rally, but it’s going to depend on global macro conditions. At this point, things look rather tenuous at best. If we can break above the 50-day EMA, that could kick off a huge move higher, perhaps sending gold to the $1925 level, maybe even the $2000 level over the longer term.
When I look at this chart, at the very least I would anticipate a bit of a pullback so that we can build up momentum and continue to rally. If we break down below the hammer that pierced the $1800 level, gold will fall apart and go much lower. In these types of environments, it’s very difficult to get overly bullish or bearish on anything with size. Make sure that you build up your position slowly.
WTI Crude Oil Forecast: Market Continues to Look Bullish
Even with US dollar strength being very possible, I just don’t see what would bring this market down anytime soon.
The West Texas Intermediate Crude Oil market rallied a bit on Monday, but it should be noted that volume will have been a bit lighter than usual as it was all after-hour trading as the Americans were celebrating Memorial Day. We are in the process of breaking out of an ascending triangle, suggesting that we are ready to go much higher. At this point, I would anticipate that a break at the highs during the Monday session could open up fresh buying to push WTI to the $120-a-barrel level rather quickly.
Pullbacks should be well supported, especially near the $110 level, assuming that we can even fall that far. Even if we broke down below the $110 level, I believe that the 50-day EMA and the massive uptrend line both come into the picture as well. Ultimately, this is a market that is more or less “buy on the dips”, as there are a lot of concerns when it comes to supply, especially as the Chinese are coming back online after being locked down.
I would point out that the most recent pullback did not dip below the 50-day EMA, unlike the previous three. Because of this, it looks like the buyers are becoming a little bit more aggressive, as sometimes the market will whisper what it wants to do to you. This was a very subtle change in attitude, but now that we are breaking out to the upside above resistance, it becomes abundantly clear that there are plenty of people that are willing to step in and pick up oil anytime they get an opportunity to find value.
As far as selling is concerned, we would need to break down below the bottom of the triangle to make that happen. That is roughly $13 from here, so I don’t see that being an issue anytime soon. Even with US dollar strength being very possible, I just don’t see what would bring this market down anytime soon. I suppose the Russians could leave Ukraine, but that is not very likely either. At this point, this is a one-way trade and should be treated as such. Eventually, I anticipate that we will probably test the highs again with the $120 level offering a bit of noise along the way.
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