Gold And Oil Are At Key Inflection Points

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Gold And Oil Are At Key Inflection Points

It’s understandable that most traders who get into speculation tend to focus on currencies. Currencies are the most active market, the most liquid market, the most leveraged market, and the market with the most advertising. That doesn’t mean there are other assets to trade and ones that can make you big returns if you get on the right side of the market.What I’m talking about today are gold and oil. As commodities these assets are affected by the dollar but they also have their own fundamentals and give some pretty good signals.

Gold Is Trading At Resistance, Resistance Is Present

Gold prices shot higher last week as traders around the world moved into the ultimate risk-off trade. The metal tested resistance for two days, Thursday and Friday, and then shot above it today, Monday. At this time the price action is bearish and forming a red candle that confirms the presence of resistance. This makes the $1591 level very important to near and long-term direction as it could become a point of reversal or continuation. In either case the moves will be big over the next few weeks and months.

What might push gold higher? The spreading coronavirus, its impact on the global economy, and a growing chance the S&P 500 might fall 20% or more. The FOMC outlook helps too. The Fed is expected to cut rates in the middle of the year and that will definitely hurt the dollar and help gold. If gold breaks above resistance and closes there we can expect it to continue rising in the near to short-term. My initial targets are at $1700 and $1725.

What might keep gold from moving higher? The technical. The technical are incredibly bearish and point to a major reversal in prices… if there is a catalyst to sell. What I am noting is a significant divergence in MACD from the current high, if that signals confirms in the stochastic and/or with price action a move to $1560 is certain, a deeper decline will depend on price action at the moving average.

Oil Trading At Support

Oil prices have been in a steep decline over the past month or so as tepid demand, rising supply and now the coronavirus weigh on prices. The black gold, WTI I am talking about here, is now trading at an 8-month low and may move much lower. The question is what will happen this week at the surprise OPEC meeting. The cartel is sure to talk about prices and the possibility of another production cut, the risk to the market is if they decide to cut or not and by how much if they do. If WTI breaks to a new low expect it to fall another 10% to the $45 region, if support confirms prices could rebound 10% t0 20% over the next week or so.

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Reference ID: #a8c89a60-75b9-11ea-9191-8b5bbb6d3140

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Key Inflection Points Reached With Oil Still The Driver

In the Weekly Outlook this Monday we consider several key aspects on the markets. What is the changing outlook of US rate hike expectations and also the impact of the UK renegotiations over its membership of the EU. However with several key markets trading around key inflection points, the overriding driver that continues drive sentiment, as it has been for several weeks, remains the movement on the price of oil. The impact on risk appetite from the oil price gains are impacting across forex, equities and commodity markets. What are the key economic indicators that you need to keep a watchful eye on this week as you look to position your trades? The inflation data out of the US on Friday has pulled up an interesting improvement in the core CPI reading, but what is the indicator that the Fed looks at and will it show similar signs of improvement?

How is oil impacting on forex markets and is the risk appetite showing a uniform impact across the majors? Also the issue of a possible Brexit is coming more sharply into view as the UK Prime Minister David Cameron has announced a date for the referendum. How is this impacting on the movement on sterling ? We take a technical analysis view on the key euro/dollar pair and also the chart impact on cable.

We take a look at the correlation between the oil price and how the major equity markets are moving, and also whether this will continue? What is the outlook for the UK’s FTSE 100 and also the German DAX , whilst we also take a technical analysis view of both, with the Fibonacci retracements still playing a significant role.

We finish with a look at the key commodity markets and also bond markets which are again a key signal for market sentiment. There is a technical analysis of gold and also Brent Crude oil .

DISCLAIMER: This report does not constitute personal investment advice, nor does it take into account the individual financial circumstances or objectives of the clients who receive it. All information and research produced by Hantec Markets is intended to be general in nature; it does not constitute a recommendation or offer for the purchase or sale of any financial instrument, nor should it be construed as such. All of the views or suggestions within this report are those solely and exclusively of the author, and accurately reflect his personal views about any and all of the subject instruments and are presented to the best of the author’s knowledge. Any person relying on this report to undertake trading does so entirely at his/her own risk and Hantec Markets does not accept any liability.

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