Gold & Commodities

The Gold & Commodities category is a sub-section of General Market Analysis that includes charts and commentary associated with precious & industrial metals such as gold, silver, and copper as well as various commodities such as oil, gas, wheat, corn, etc…

Nov 262014
USO 60 minute Nov 26th

USO 60 minute Nov 26th

USO (crude oil etf) is currently backtesting the bullish rising wedge pattern following the recent breakout. My expectation is for a successful backtest (i.e.- prices reverse soon & move higher) but if that does not prove to be the case, the suggested stop criteria for this trade remains a 3:1 R/R calculated on the average entry price to the one’s preferred price target (T1 – T4).

As this updated 60 minute chart notes, bullish divergences are still in place as USO prints this marginal new low. As such, USO still offers an objective new entry or add-on with the appropriate stops set not too far below this backtest level.

On another topic, there are a few administrative items to mention: First, I will be leaving town today for the Thanksgiving holiday, returning over the weekend. As such, market analysis & trade updates will be few, if any, for the remainder of the week.

Next, it has recently been brought to my attention that some users may be experiencing intermittent or ongoing issues when trying to access Right Side of the Chart. We are currently working on determining the cause and extent of this issue and would appreciate any feedback from anyone who has recently or currently had issues accessing the site. If so, please click here to contact us, providing any details such any error messages, your location and the frequency of the issue.

Finally, when using the Contact form (located under the Resources tab on the menu at the top of the site), make sure to verify that your email address is entered correctly. Occasionally, after replying to a question on a trade idea, market commentary or some other inquiry, I will get an “email not delivered” auto-reply due to an invalid email address. Every inquiry received at RSOTC is replied to, typically within 24 hours (M-F). If you do not receive a reply from an inquiry that you sent via the contact form, please re-send it, verifying that the correct reply-to email address has been entered.

Happy Thanksgiving!!

Nov 252014

SLV (Silver ETF) will trigger a new long entry or add-on to an existing position on a break above 16.05, which is a minor horizontal resistance level that lies just above the current intermediate-term downtrend line. I have updated the daily chart of $SILVER (spot silver prices), which can be found under the Live Charts page, although keep in mind this is an EOD (end-of-day) chart. The daily chart of SLV is also included below. Although the actual resistance on SLV comes in around 17.80, as usual, my price target has been set somewhat below the actual resistance in order to help minimize the chances of missing a fill, should SLV reverse just shy of resistance. Stops to be determined upon entry & additional longer-term price targets may be added.

Nov 242014

Both $GOLD (spot gold prices) and GLD (gold ETF) remain slightly above their respective key support levels which were defined by the 2013-2014 triple-bottom lows. The fact that gold has been able to rally back above that level after briefly breaking down and trading below for about two weeks has so far set the potential for a bear-trap/short-covering rally although I am somewhat concerned about the relatively muted price action since that major support/resistance level was regained early last week. Typically, the price action immediately following a bull trap or bear trap is impulsive as those traders who positioned on the breakout/breakdown scramble to exit their positions and new traders pile in once it is clear that the breakout failed and so far, that has not been the case.

Irrespective, price action comes first with volume and all other supporting evidence a distant second so as long as $GOLD remains above the 1180ish level and GLD above the 114.50ish level, I will remain “cautiously bullish” on gold, becoming increasing bullish should gold prices start to climb comfortably above that key technical level. I have updated the daily $GOLD chart, which is accessible on both the Live Charts page as well as the Live Chart Links sidebar on the homepage of RSOTC. The previous downtrend line has been adjusted to account for the price action over the last several months. That downtrend line, which current comes in around the 1250 ($GOLD) and 120 (GLD) level, which also aligns with minor horizontal resistance as defined by the Oct 21st reaction highs. The next major direction in gold prices is likely to be determined by a solid break above or below these support (1180/114.50) and resistance (1250/120) levels.

Until then, I’d expect the price action in gold & the miners to continue to be choppy and relatively difficult with large day-to-day and even intraday swings, which makes for tough swing trading as all but the widest of stops are likely to be run. Longer-term traders bullish on gold, silver & the mining stocks might opt to take advantage of this volatility using a scale-in strategy (accumulating fractional positions over the next several weeks/months) as long as gold remains above support, with a scale-out exit strategy or hard stops set on a solid move and/or weekly close back below support.

Nov 212014

PPLT (Physical Platinum Shares ETF) offers an objective long entry on this breakout above the bullish falling wedge pattern. T1 is the sole target at this time with additional targets likely to be added soon, depending on how the charts play out going forward. Suggested stop below 117.64 or higher if targeting only T1 although longer-term traders & investors might consider a scale-in strategy with higher price targets & wider stops.

With the $USD still in an uptrend and GLD currently still attempting to solidly take out the 115 level, more conservative traders & investors might opt to wait for those aforementioned events (dollar reversal & a confirmed GLD breakout) to occur before establishing a position. We’ve also yet to see a confirmed, end-of-day breakout in $PLAT (spot platinum prices) although keep in mind that the spot charts below are EOD (end-of-day) and reflect yesterday’s closing prices. Platinum futures are currently trading up nearly 2% so a close above the downtrend line on the daily spot chart below today is likely, barring a reversal into the close.

Daily chart of PPLT along with the daily & weekly charts of $PLAT (end-of-day spot platinum prices) below. Besides PPLT & futures, there are several other options for trading platinum although these are all thinly-traded ETFs: PGM, PTM, PLTM, LPLT, & SPPP. Click here for information on PPLT.

Nov 212014

SGG (Sugar ETF) will be added as an Active Long (swing) Trade & Long-term (investment) Trade here around the 41.45 level with a suggested stop slightly below the recent low of 39.55. Targets TBD. Daily chart of SGG and weekly chart of $SUGAR (spot sugar prices) below:

Nov 212014

As my primary focus remains on precious metals (gold, silver & the mining stocks) as well as select commodities (coal, crude oil and specific agricultural commodities), I continue to keep a watchful eye on the US dollar along with the Euro & Yen. With the US Dollar index trading higher overnight due to China’s first rate cut since mid-2012 along with some renewed jawboning from Mario Draghi threatening new stimulus measures to slay the deflationary dragon, it is worth noting that not only does the recent disconnect of the inverse correlation between the dollar vs. gold & oil continue, with both crude oil & gold trading sharply higher overnight in spite of the spike in the $USD, but should gold & oil hold onto (and especially continue to build upon) these overnight gains, both will have clearly taken out some key resistance levels: The aforementioned 114.70-115 former triple-bottom in GLD as well as the bullish falling wedge pattern on USO.

Also keep in mind that the technical case for the recent long trade in USO (crude oil etf) was two-fold: The bullish falling wedge pattern on the 120/60 minute time frame as well as the fact that USO had recent fallen to the bottom of a long-term support zone that has contained prices for over 5 years now (also while registering the most oversold reading on the weekly RSI since the global financial meltdown in late 2008). I had recently pointed out that USO was trading slightly below that support level so if these overnight gains hold, USO is currently poised to gap up right back to the bottom of that former support zone. As with my primary scenario in gold & silver, the recent break below key long-term support in USO would prove to be a bear-trap, should USO move solidly back above that support level.

In summary, although the day is still young, the pre-market action in both GLD & USO is poised to carry over to some potentially longer-term bullish technical events. The fact that gold & oil have been rising despite the recent strength in the dollar can only be viewed as bullish. Whether or not this proves to be a temporary disconnect between the typical correlation between these pairs is yet to be seen but if my call for a major reversal in the dollar does pan out, then gold, oil & most other commodities would likely move sharply higher.  The first chart below is the weekly chart of $XEU (Philadelphia Euro Index) that was posted on Oct 3rd, pointing out at that time that the EURO had about 2 1/2% downside left before reaching the bottom of a very large, well defined triangle pattern. The next chart is the update weekly of $XEU. Keep in mind this is an end-of-day chart & therefore, Draghi’s most recent jawboning is not reflected in this chart although as the third chart shows (real-time EUR/USD daily) the EUR is down just over 1%, which would currently put the $XEU much closer to that long-term support line.

note: This update was composed before the m

Nov 202014
USO 120 min Nov 20th

USO 120 min Nov 20th

USO (Crude Oil ETF) has broken above the bullish falling wedge pattern on the 120 & 60 minute time frames, thereby triggered the second, more conventional entry or an add-on to an existing position taken inside with wedge. I’ve added a minor horizontal resistance at the 28.95 level which, if cleared, would further increase the odds of this breakout sticking.