Oil grinds higher
Oil prices ground higher overnight as black gold continued to benefit from recovery sentiment in the US/Europe/China axis. Brent crude rose 1.05% to USD69.45 a barrel, advancing to USD69.60 a barrel in Asia. WTI rose 1.25% to USD66.30 a barrel, adding another 15 cents toUSD66.45 a barrel in Asia.
Brent crude is now within shouting distance of significant resistance at USD70.00 a barrel. A rise through USD70.00 should trigger more systematic buying and see it advance to USD71.50 a barrel quite quickly. Support lies at USD68.25 and USD67.75 a barrel.
WTI remains comfortably within its bullish channel and has resistance just above at USD66.60 a barrel. That will set up a larger rally, potentially reaching near the channel’s top at USD68.00 a barrel. Support is at USD65.00 and then the bottom of the channel at USD64.00 a barrel.
Gold’s outperformance continues
Gold had another impressive session overnight, rising 1.30% to USD1867.00 an ounce. In Asia, it has advanced slightly, rising to USD1868.00 an ounce. The trigger for the renewed gold buying appears to be its rise through its 200-DMA at USD1848.00 yesterday. That seems to have triggered systemic and fast-money buying.
However, the pace of the gold rally appears to be outpacing fundamentals right now, and the Relative Strength Index (RSI) has entered overbought territory. That is a warning sign that gold is vulnerable to a short-term pullback, even if its overall fundamentals have not changed.
Gold has resistance just above at USD1875.00 an ounce, followed by USD1920.00 an ounce, although I do not doubt that more fast money will enter the fray if USD1900.00 capitulates. Gold’s nearest support is yesterday’s breakout region at USD1845.00 an ounce, where the 200-DMA also loiters this morning. That is followed by USD1820.00 an ounce.
Although gold looks set for higher honours, a safer strategy might be to buy on dips rather than chasing it higher at these overbought levels in the short term.
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
Source: https://www.marketpulse.com/20210518/oil-and-gold-head-higher/
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