Commodities: Don't Chase
Although there is likely to be some more upside in the recent bull run in commodities, significant resistance is not far away and a top or a significant period of sideways action is likely to ensue soon.
Gold:
That was a pretty reverse head and shoulders bottom and the target of 1150 has already been exceeded. I suspect a continuation to the 61.8 Fibonacci level around 1163 is likely but no more on this run. In fact I should say gold will be a sell at that level for a trade back to its recent lows as it forms yet another large flag or pennant formation prior to its next big move.
Silver:
Silver is not far away from a cluster of trend channel, horizontal and downtrend resistance in the $1940 area. A weekly close above that zone will be very bullish and should produce a monster run. But weakness there may likewise provide a good selling opportunity for a move back to 16.10-16.50 at the 61.8 Fib level and the bottom rail of the uptrend.
Crude Oil:
A run to the top of the trend channel will put daily RSI in a very overbought condition and a reaction back to the level of the recent breakout will likely ensue.
Copper:
Pretty much the same situation exists for copper.
In summary, although there is likely to be more upside in commodities the upside potential is insufficient to warrant a trading entry here. Patience will likely be rewarded with a better setup at lower prices for a long entry (if indeed the bull run is to continue). Don't chase!
Volatility in the dollar as it seeks to carve out a longer term bottom is likely to factor into the commodities trade as well. I'm still eyeing a very long term head and shoulders reversal pattern:
Gold:
That was a pretty reverse head and shoulders bottom and the target of 1150 has already been exceeded. I suspect a continuation to the 61.8 Fibonacci level around 1163 is likely but no more on this run. In fact I should say gold will be a sell at that level for a trade back to its recent lows as it forms yet another large flag or pennant formation prior to its next big move.
Silver:
Silver is not far away from a cluster of trend channel, horizontal and downtrend resistance in the $1940 area. A weekly close above that zone will be very bullish and should produce a monster run. But weakness there may likewise provide a good selling opportunity for a move back to 16.10-16.50 at the 61.8 Fib level and the bottom rail of the uptrend.
Crude Oil:
A run to the top of the trend channel will put daily RSI in a very overbought condition and a reaction back to the level of the recent breakout will likely ensue.
Copper:
Pretty much the same situation exists for copper.
In summary, although there is likely to be more upside in commodities the upside potential is insufficient to warrant a trading entry here. Patience will likely be rewarded with a better setup at lower prices for a long entry (if indeed the bull run is to continue). Don't chase!
Volatility in the dollar as it seeks to carve out a longer term bottom is likely to factor into the commodities trade as well. I'm still eyeing a very long term head and shoulders reversal pattern:
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