Crude Oil Outlook: Breakout Ready or Will Iran Risk Weigh?
Crude oil prices popped nearly 4% on Monday to test the upper end of its recent range Eclipsing the $68.00-price level could see the commodity take aim at its 2018 swing high Iran nuclear deal and covid concerns across Asia pose headwinds to crude oil outlook Learn about WTI vs Brent or visit our education center for insight on technical analysis
Crude oil price action spiked higher on Monday to trade around $66.00/bbl. This pushed the commodity back to the upper end of its recent trading range, which has largely capped WTI since 08 March. I’ve had this technical resistance level highlighted on my charts for a while and even pointed out potential for crude oil prices to edge lower toward trend support. As expected, WTI crude oil did pull back from this level, and bulls have been showing up to defend the 50-day simple moving average. Crude oil price action has now gained roughly 7% over the last two trading sessions. This is threatening a breakout as the MACD oscillator starts to form a bullish crossover.
CRUDE OIL PRICE CHART: DAILY TIME FRAME (28 DEC 2020 TO 24 MAY 2021)
Gold Price Outlook: XAU/USD Struggles as Bitcoin Rises, Eyes on Fedspeak Ahead
Gold struggled rising despite USD and Treasury yield weakness Bitcoin climb may have offset the yellow metal’s upside potential XAU/USD breakout above resistance seems unconvincing for now
Anti-fiat gold prices spent most of Monday consolidating as the yellow metal’s upside momentum slowed. XAU/USD was also unable to capitalize on a weaker US Dollar and falling longer-term Treasury rates. The 10-year yield fell to its lowest in about 2 weeks. Dovish Fedspeak seemed to be the key fundamental driver behind the performance in the Greenback and bonds over the past 24 hours.
Cryptocurrencies received a boost though. Bitcoin rallied over 11 percent after Tesla’s Elon Musk tweeted about progress towards renewable mining. Mr Musk has been in the spotlight lately when it comes to cryptocurrencies. That is because Tesla recently stepped back on accepting Bitcoin as an alternative payment method for its electric vehicles due to environmental concerns, sapping demand for BTC/USD. Gold has been in the spotlight as well during the general selloff in cryptocurrencies seen over the past couple of weeks. In fact, there have been rising curiosity in the inverse relationship between XAU/USD and BTC/USD as of late. Correlation does not imply causation however.
Analysts from JPMorgan have been suggesting that that institutional investors are moving into gold as they ditch cryptocurrencies.
Over the next 24 hours, gold will likely see some volatility around US conference board consumer confidence data and Fedspeak. Richmond Fed President Thomas Barkin and Vice Chair Randal Quarles will be speaking. Ongoing dovish commentary that continues to reiterate patience when it comes to tapering may offer a supportive environment for the yellow metal. Gains in crypto could risk sapping gold’s potential though.
GOLD TECHNICAL ANALYSIS
Gold’s breakout above the 1863 – 1875 resistance zone and the falling trendline from August appears unconvincing. Doji candlesticks continue appearing, a sign of indecision that can precede turning points in established trends. Still, in the event of a turn lower, rising support from the end of March could maintain the near-term upward bias. Extending gains places the focus on the 61.8% Fibonacci retracement level at 1923.
XAU/USD DAILY CHART
Dow Jones Gains, Nasdaq 100 Outperforms Amid Dovish Fedspeak. ASX 200 May Rise
Dow Jones gains, Nasdaq 100 outperforms amid dovish Fedspeak Asia-Pacific equities may rise, especially ones skewed towards tech Australia’s ASX 200 could be aiming to revisit 2020 peaks near-term
MONDAY’S WALL STREET TRADING SESSION RECAP
Equities on Wall Street gained, with the tech-heavy Nasdaq 100 leading the charge, climbing 1.72% on Monday. The S&P 500 and Dow Jones Industrial Average gained 0.99% and 0.54% respectively. This likely reflected demand for growth-oriented equities compared to value ones. This followed fading 2022 Fed rate hike bets as Treasury yields declined during a fairly quiet session deprived of key economic data risk.
Ongoing dovish commentary from the central bank seemed to play a role here. Atlanta Fed President Raphael Bostic noted that right now, he does not see that inflation will be enduring. This is as St. Louis Fed President James Bullard said that they are ‘not quite there’ in terms of being ready to talk about tapering policy. The central bank has been downplaying last month’s elevated CPI report, and markets have been taking notice.
DOW JONES TECHNICAL ANALYSIS
From a technical standpoint, Dow Jones futures are eyeing a key zone of resistance between 34352 and 34427 on the 4-hour chart below. Breaking higher could open the door to extending the bounce off rising support from October. That would likely place the focus on the all-time high at 35000. Having said that, negative RSI divergence shows that upside momentum is fading. This may precede a turn lower.
DOW JONES FUTURES – 4-HOUR CHART
TUESDAY’S ASIA PACIFIC TRADING SESSION
With that in mind, Tuesday’s Asia-Pacific trading session could see the positive sentiment from Wall Street carry over. This is particularly in focus given a fairly quiet day in terms of data. This may place Australia’s ASX 200 and Japan’s Nikkei 225 on the offensive. Strong gains in tech stocks overnight may offer further upside momentum for South Korea’s KOSPI index and Taiwan’s TAIEX. The latter is more concentrated in the semiconductor industry.
ASX 200 TECHNICAL ANALYSIS
On the 4-hour chart, the ASX 200 closed at its highest since May 11th, pushing above the May 18th peak. That is placing the midpoint of the Fibonacci extension into focus at 7101. There was also a bullish crossover between the 20- and 50-period Simple Moving Averages (SMAs). On balance, this could point for a near-term rosy picture. This is also amid what appeared to be a false breakout under rising support from 2020. Further gains would expose the 2020 high.
ASX 200 – 4-HOUR CHART