An interesting phase of price action for two of the most precious commodities over the last few days, with both gold and oil, testing key tipping points on the daily chart. For gold, the immediate danger appears to have been averted for the time being, with the metal surging higher on the back of a weak US dollar. For oil, the opposite has occurred, and the outlook remains critical, as it continues to test the well developed level of price support in the $101 per barrel area. The significance of this region, from a technical perspective, cannot be overstated, and the volume at price histogram tells its own story.
Here we have three deep bars of price congestion, extending from the $107 per barrel price point, down to today’s current trading level at $100.86 per barrel, and herein lies the problem. Any clear break below this level, is then likely to tip crude oil over the edge, and down towards the next logical area in the $94.50 per barrel region, where potential support awaits. It is also interesting to note that since the start of the month, the high of each day has been subsequently lower than it’s predecessor, telling its own story. With the US closed on Wednesday, the weekly oil stats were yet another casualty, and coupled with a calming of the rhetoric surrounding Syria, this too has seen buying euphoria dissipate. Now we wait, and should oil close below this key support region, then expect to see crude oil prices back in double figures soon!
By Anna Coulling