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Crude Oil Price Chart Flashing Early Bearish Reversal Warning

CRUDE OIL & GOLD TALKING POINTS:

  • Crude oil price chart flashing early bearish warning, earnings flow in focus
  • Selling pressure may be compounded if EIA inventory data echoes API print
  • Gold prices fall as US Dollar gains overpower drop in Treasury bond yields

Crude oil prices extended Monday’s impressive surge to touch a six-month high. The move appeared to be sentiment-driven, with the WTI benchmark racing higher alongside US stocks in early Wall Street trade. The rally fizzled as the equities upswing stalled midday however, with prices retreating into the close to erase more than half of the intraday rise.

APIweekly inventory flow data helped drive the afternoon retreat. It claimed that US stockpiles added a hefty 6.86 million barrels last week. Official EIA statistics due today envision a meager 810.7k rise. An outcome closer in line with API’s estimate might weigh on oil prices. The ongoing flow of first-quarter corporate earnings releases is likely to remain in the spotlight however.

Another busy day on the reporting docket will see outcomes from 43 constituents of the bellwether S&P 500 index cross the wires. Notable names shaping global business cycle bets ahead of the opening bell on US exchanges include Caterpillar and Boeing. If the tone of these announcements rekindles worries about the ongoing slowdown in broad-based economic growth, oil prices may fall amid risk aversion.

GOLD PRICES DOWN AS US DOLLAR GAINS OVERPOWER BOND YIELDS DROP

Gold prices fell as the US Dollar powered higher despite the risk-on move in the stocks space. In fact, sentiment was on the defensive across most other benchmark assets. The Greenback rose alongside the similarly defensive-minded Japanese Yen and US Treasury bonds in what appeared to be a response to worrying Brexit developments. That tarnished the appeal of anti-fiat alternatives like the yellow metal.

The move is notable in that it showed the influence of the US currency overshadowing a supportive a supportive drop in bond yields, a move that was itself a consequence of the downbeat mood outside equities. This hints that continued de-risking bodes ill for the metal, a theory that may soon be tested as earnings reports continue to flow in.

See the latest gold and crude oil forecasts to learn what will drive prices in the second quarter!

GOLD TECHNICAL ANALYSIS

Gold prices are resting atop support in the 1260.80-63.76 area, with a break below confirmed on a daily closing basis exposing the 1235.11-38.00 zone. Alternatively, a turn back above support-turned-resistance at the neckline of a Head and Shoulders (H&S) chart pattern – now at 1281.83 – sets the stage for test above the $1300/oz figure. The H&S setup broadly implies a downside objective at 1215.00.

Gold price chart - daily

CRUDE OIL TECHNICAL ANALYSIS

Crude oil prices put in a Shooting Star candlestick below resistance in the 66.09-67.03 area, hinting at indecision that may precede a reversal lower. Negative RSI diverse bolsters the case for a downside scenario. A daily close below trend line support at 62.42 exposes initially exposes 60.39. Alternatively, a breach of resistance paves the way to challenge the $70/bbl figure.

Crude oil price chart - daily

COMMODITY TRADING RESOURCES

— Written by Ilya Spivak, Currency Strategist for DailyFX.com

To contact Ilya, use the comments section below or @IlyaSpivak on Twitter

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