#Gold (#XAUUSD) & #WTI #CrudeOil Forecast: 19 JULY 2022

 

Gold Forecast: Markets Give Up Early Gains on Support

I think we’ve got a scenario where the market continues to see plenty of reasons to fade rallies.

Gold markets rallied rather significantly in the early hours on Monday, as the market reached the $1725 level. However, we have given back quite a bit of the gain, so it looks as if the market is going to end up forming an inverted hammer, which is not a good look. In other words, the next daily candlestick could give us a “heads up” as to where we are going for a bigger move, and therefore you should be paying close attention to this.

When you look at this chart, it’s obvious that the $1700 level has been supported multiple times in the past, and it’s likely that we will see that area continue to be stubborn to break through. However, if we were to break through the overall support level, which I think extends down to the $1680 level, it could open up the possibility of a move to much lower pricing. At that point, we could be talking about dropping down to the $1500 level, which is a large, round, psychologically significant figure. It’s also an area where we have seen a lot of movement previously, so I think it will be attractive to buyers.

On the other hand, if we were to break above the $1725 level, then it’s possible that we could go to the $1750 level. That is an area that should be important, so if we were to break above it, then it’s likely that we could go to the $1800 level. The $1800 level also features the previous uptrend line, a large, round, psychologically significant figure, and then the 50-day EMA which sits just above there. Ultimately, I would love to short this market near the $1800 level, unless of course there is some type of change in Federal Reserve monetary policy. Until then, I don’t necessarily believe that the markets are going to be very bullish at all. With that in mind, I think we’ve got a scenario where the market continues to see plenty of reasons to fade rallies, so I think it’s likely that we are going to see plenty of hesitation to go higher, and we will continue to see the US dollar act as if it is a wrecking ball against almost all assets.

WTI Crude Oil Forecast: Market Jumps to Kick Off Week

I think we will have a lot of noise of the next couple of days before we make a relatively serious break in one direction or the other.

The West Texas Intermediate Crude Oil market has jumped quite significantly Monday as the trip to Saudi Arabia proved fruitless for Joe Biden. After all, there was always a potential concern that the Saudi government would start to pump more crude oil, but they essentially rebuked any overtures from the West.

Because of this, crude oil has seen a nice rally, getting over 4% for the session. The question now is whether or not we are going to start focusing on lack of supply, or lack of demand? If we are in fact heading into a recessionary environment, there will be a severe lack of demand for the commodity. If that’s the case, then we will obviously fall over the longer term.

From a technical analysis standpoint, we pierced the 200-day EMA a couple of sessions ago, only to bounce from there. This is a major indicator that a lot of people will pay close attention to, so it does make a certain amount of sense that we would have a bounce occur. At this point, now we have to start paying close attention to the previous trendline, because “market memory” should come into the picture to cause a little bit of resistance.

The 50-day EMA sits at the $110 level, which is just above that trendline. In other words, I think if we are going to break out to the upside, we have a lot of work to do. If that were to be the case, then the 50-day EMA being broken to the upside would be your first major sign that something is changing. There is a strong probability that we either find sellers just above and start falling again, or we simply go sideways as we are trying to figure out what happens next. A little bit of consolidation probably makes quite a bit of sense, so it does make for a reasonable expectation of sideways action.

If we were to continue seeing a lot of noisy behavior, then you will need to be cautious about your position size as it is a scenario where we would have a lot of difficult behavior to hang onto. Ultimately, I think we will have a lot of noise of the next couple of days before we make a relatively serious break in one direction or the other.

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