Gold
Gold (XAU/USD) remains stuck in a 4-month sideways channel which makes trade identification difficult. With the release of the inflation number, anything could happen today.
We are holding the 1-month upper trend line which joins the July and August peaks at 2473/75, with a high for the day exactly here yesterday.
Gold is overbought so if we hold the trend line again today we will remain in a sideways channel, targeting 2463/62 and 2452/50, although yesterday we saw a low for the day in the middle of these 2 targets.
If you want to try a short I would stop above last week's peak at 2477/78. At least the trade has a good risk vs reward.
A break above 2479 tests the July all-time high at 2483/84. Obviously, bulls need a break above here to signal a potential new leg higher in the longer-term 20-year bull trend.
We may get that today on a weaker-than-expected inflation release.
A break below 2458 today can target 2452/50. If we continue lower we should find support at 2438/33.
Longs need stops below 2430.
In a consolidation channel such as this, it is more likely that prices will break higher eventually because it is expected to be a continuation pattern, not a reversal pattern.
So the longer-term bull trend is expected to continue higher eventually, although the timing of the breakout above the all-time high is impossible to know.
For example, the dollar has been in a sideways trend for almost 2 years and has become almost impossible to identify low-risk opportunities now.
The moves are so random and erratic - no clear pattern to follow.
Prices just trade up and down, back and forth over old ground.
Moving averages flat line and converge. Trend lines are no longer reliable.
Here's a note of the levels if you want to scalp the release of the inflation data:
- Resistance at 2473/75
- Last week's high at 2477/78.
- July all-time high at 2483/84.
- Below 2458 today can target 2452/50.
- Support at 2438/33
Silver
Silver (XAG/USD) has been trending lower to retest the July highs, Unable to hold above the peaks of 2021 and 2022; losing about 20% of it's value since May, so not much of a bull trend really.
Silver has bounced over the past week however and now tests a 4-week downtrend line around the 23.6% Fibonacci at 2770/90.
Shorts need stops above 2805.
A break higher should be a buy signal targeting 2840/50. We are likely to pause here but shorts are probably too risky.
If we continue higher look for 2900/2910 as the next target.
If you try a short at resistance at 2770/90, look for 2730/20 as the 1st target and perhaps as far as the August low at 2670/60.
WTI Crude September Future
Last session low and high for the September contract: 7816 - 8015.
(To compare the spread with the contract that you trade).
WTI Crude is yet another market caught in a longer-term sideways channel, around 2 years old. We have retraced all the losses from mid-July and we are exactly in the middle of that 2-year range.
It's particularly difficult to identify opportunities in the middle of the range of course, especially when moving averages have been flatlining and converging for 6 months.
My best guess is that if we hold above 7890/7850 (and we dipped to this area yesterday) we can continue higher towards 8300.
A break below 7800 (we held just above here yesterday) however risks a slide to 7660/20.
For the last 11 months, WTI Crude has been consolidating in a narrowing triangle pattern as the monthly ranges decrease.
The 11-month trend line resistance at 8250/8300 could be tested now.