The weekly chart below shows a nice symmetrical triangle pattern…Prices breached support of weekly 100-MA (still sloping upwards) and $1214.40 (May low). The metal extended losses to $1204.70 earlier today before recovering to $1212.60.
I feel the metal has found a temp low at $1204.70 and is likely to extend the recovery to $1219 and $1230 levels…. mainly because the 10-year treasury yield is yet again struggling to break above 2.4%.
Going by the technical rules, the bulls – inverse head and shoulders – should win the battle because — Head and Shoulders (bearish reversal) works best when it appears at the top of a bull market. while the inverse head and shoulders (bullish reversal) works best when it appears at the bottom of the bear markets.
Over here, the inverse head and shoulders pattern is being formed at the bottom of a 7-1/2 year sell-off…
Looks like the technical correction has ended. As of now, oil is trading below $44.08 – 38.2% Fib retracement of the rally from Feb low.
The sell-off yesterday is nothing more than a technical pull back that allows the short-term MAs catch up with the price action. Prices are on the rise and are expected to revisit 50-DMA hurdle seen today at $49.53.
Buy around $48.50 Objective $49.53 Stops below 48.00. Stop might be blown, given it is too close, but i would not hesitate to re-enter longs…again
Rising trend line breached and now attempting to cut through a head and shoulders neckline. I would be a seller below $48.70, and would be out below $48.00. That’s quick fire intraday trade.
The sharp rally in Brent oil has run into the 50-DMA hurdle. The moving average is sloping lower, so I wouldn’t want to bet on further gains. Expect sideways to negative action. Also note the bearish 100-DMA & 200-DMA crossover. What’s more important is the fact that the crossover has happened during the sharp rally… so it is more likely to work.
One can initiate short trades with very tight stops. On the downside, $48-$48.27 is a strong support. Fresh longs could be initiated below $48.00 levels.