The Gold
Gold did a turn around going from targeting the 1000 mark to reversing back down toward the low 800 level. Since it reached near the 970 in mid March, it has reversed and dipped below the 50 SMA. Just a few days ago, it came close to testing the 200 SMA for support. The recent price actions have established a lower high and lower low, thus forming a down trend. From the gold continuous contract daily chart, a downward price channel can be drawn that point to a support near the 800 level. Unless the recent bounce off the 200 SMA re-establish a new higher high that can turn into a new rising trend, I will continue to watch it for lower prices.
A similar downward price channel is also being formed on the ETF GLD daily candlestick chart. This price channel points to support near the 80 level.
For those that are interested in playing the downside on gold using ETF without shorting the GLD, you might want to conside trading the GLL. This is the ultra short ETF on gold. This is a leveraged ETF, like all other leveraged ETFs, they are for short term trading only. Do not hold these ETFs too long. The volume on the GLL is relatively low comparing to the GLD, so watch the spread.
The Oil
The oil continuous contract was forming a rounded bottom until the last week or so. The rounded bottom has transformed into a cup & handle pattern with a measured move that could put the price in the 70s.
For the ETF, USO, an inverted head & shoulder pattern is being formed. The measured move from this H&S pattern could put the price in the 45 range.
The projected price levels from these charts are pending on the completion of their respective price pattern and breaking out from it. I have not identify what might trigger the crude prices to move to these levels. For now, I'm just monitoring it to see if this scenario will play itself out. Until then, I'm not initiating any trade on USO under this scenario, but that doesn't mean I won't be trading USO under other technical guidance. In the near term, I still believe oil will be trading in the 45-55 range.
