Get 40% Off
🚨 Volatile Markets? Find Hidden Gems for Serious OutperformanceFind Stocks Now

Oil, Gold, Dollar: Charts Signal Bullish Commodities, Bearish USD

Published 05/04/2015, 12:03 AM
Updated 07/09/2023, 06:31 AM

Crude Oil has shown an impressive recovery from the monthly demand zone around $45, closing April with a bullish engulfing candle. Should it continue going up, a new demand zone may form between $46 and $53.50 (light blue rectangle.) On the upside, the chart may find resistance around the broken demand zone of $71-$80. Crude Monthly

The weekly chart is showing a confirmed double bottom, whose potential target is around $66. A test of the neckline around $55.80 has already occurred, but if the price goes down to that zone again, it could provide those who are looking to buy the commodity with a good risk:reward ratio.Crude Oil Double Bottom

Gold has been consolidating for many months between roughly $1100 and $1400, testing the resistance-to-support line of $1180. The monthly chart is still compressing slowly inside a falling wedge, which is essentially a bullish pattern. The wedge is forming just above a demand zone, whose top is around $1100. Usually, the compression into a demand zone shows that the institutional firms (banks, hedge funds) are in the process of accumulation: buying large amounts over a long period as long as the price is "cheap" and attractive enough. The same process may be taking place via another precious metal, with JP Morgan accumulating physical silver.

Technically, only closing outside the upper trend-line of the falling wedge will confirm a bullish move, but prior to that, bullish price action—in the form of a big bullish engulfing candle, a morning star or other strong bullish candle patterns—may suggest a coming upward move in gold. On the other hand, closing below the demand zone could signal another leg down.

3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads .

Gold Monthly

The US dollar has just formed an interesting bearish engulfing candle on the monthly chart, after going up for nine consecutive months. If the index keeps going down, it may form a monthly supply zone between 96 and 100, with no apparent demand zone all the way down to around 80. The top trend-line of the breached triangle could serve as support, should the index go that far down. A retest of the weekly or daily supply zone within the monthly supply zone, with clear price action, may give the signal for further decline.

USD Monthly

US Dollar Index Daily Chart

Disclaimer: The information provided represents the author's own opinions and does not contain a recommendation for any particular security or investment. The author, as well as Investing.com editors who helped produce this article, may own positions in instruments mentioned. We encourage you to do your own due diligence.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.