Talking Points:
Gold Prices Stable On North Korean Weapons Testing, Aggressive Pricing In Of Fed Rate Hikes May Favor Eventual Gold Upside Oil's Market Structure Shows Limited Downside, Charts Appear Bullish Crude oil prices remain trapped in the consolidation of 2017 that followed the dramatic rise over the majority of 2016 after falling as low as $26/bbl in February. On Monday, the fundamentals of the Oil market received a favorable surprise when Iraq noted that OPEC would most likely need to extend output cuts, which have recently seen a 90%+ compliance rate.
The reduction in supply from OPEC in accordance with balancing oversupply that caused much of the downturn in 2014-2016 has been met with strong supply expansion projects from non-OPEC members. Many see this fundamental tug-of-war as a key factor in the lack of price breakout on the back of the OPEC cuts. On Friday, we saw the seventh consecutive rise in active US Oil rigs per Baker Hughes, which shows more supply coming onto the market from US Producers.
GOLD TECHNICAL ANALYSIS Gold prices pulled further away from the 200-DMA on Monday. The price of Gold pushed away from the 200-DMA ($1,261/oz), where Gold also fell aggressively below on November 9. Many traders are keeping an eye on $1,218/oz, which is the 38.2% retracement level of the July-December range from $1,375-$1,122.5 per oz. A daily close below the 1218 area (polarity point in January/ February) exposes resistance-turned-support failing and changing the structure of the trend. A break below $1,218 would open up the late January low as a target at $1,180/oz. A move above the 200-DMA ($1,262/oz.) would resume the Bullish Bias that we have seen gaining traction since mid-December.
Chart created using TradingView
CRUDE OIL TECHNICAL ANALYSIS Crude oil prices remain stuck in a narrow range, but the longer-term structure appears trend continuation. While there was excitement on the recent run to $55/bbl, it's quite possible we're tracing out a larger bullish Triangle chart formation than previously anticipated.
We will continue to favor the patient-longer-term Bullish view absent a move below Triangle top resistance-turned-support at 53.66 aims for trend line support doubling as the Triangle bottom, now at 52.31.A daily close above the 55.21-65 area (January 3 high, 38.2% Fibonacci expansion) targets the 50% level at 57.18 and quite possibly, higher.
Chart created using TradingView
--- Written by Tyler Yell, CMT, Currency Analyst & Trading Instructor for DailyFX.com
Contact and follow Tyler on Twitter: @ForexYell