WTI Continues The Downtrend

Gold finds support marginally above 1140

gold

Commodities (WTI) Trading Account?

Gold traded lower on Tuesday, but hit support two dollars above the 1140 (S2) hurdle and rebounded to trade back above 1150 (S1). The FOMC statement today could prove the catalyst for another test near the 1140 (S2) barrier, and if the bears are strong enough to overcome it, I would expect them to set the stage for extensions towards our next support at 1130 (S3). Taking into account that the precious metal is still trading below both the 50- and the 200-period moving averages, and below the downtrend line taken from back at the high of the 22nd of January, I still consider the outlook to be negative. Our oscillators support the case for further declines as well. The RSI hit resistance at its 50 line, moved lower, and now appears ready to break its upside support line, while the MACD, already negative, touched its toe below its trigger line.

• Support: 1150 (S1), 1140 (S2), 1130 (S3).

• Resistance: 1165 (R1), 1175 (R2), 1190 (R3).

WTI continues the downtrend

wti

Commodities (WTI) Trading Account?

WTI hit resistance near the 44.00 (R2) barrier and tumbled to trade below the 43.00 (R1) level. The price found support at 42.40 (S1), but I still expect a test of the 42.00 (S2) line, marked by the low of the 11th of March 2009. The near-term path remains negative and I would expect a move below 42.00 (S2) to set the stage for larger downside extensions towards the psychological zone of 40.00 (S3). However, at the moment I would be careful that an upside corrective move could be looming before sellers seize control again. This is because I see positive divergence between the RSI and the price action. Moreover, the MACD looks ready to cross above its signal line. On the daily chart, WTI is still trading below both the 50- and the 200-day moving averages. Meanwhile, the 14-day RSI just crossed below its 30 line, while the MACD moved deeper into its negative field. This keeps the longer-term bias to the downside, in my opinion.

• Support: 42.40 (S1), 42.00 (S2), 40.00 (S3).

• Resistance: 43.00 (R1) 44.00 (R2), 45.00 (R3).

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