Gold and oil analysis

Gold and oil have been trending lower for quite a while. From fundamental point of view I see a lot of politics going on with both commodities. Due to annexation of Crimean and turmoil in Ukraine Russia faced a lot of pressure from the West and one of the reasons for fall in oil prices could be just this. I can never be sure about it, but big boys definitely have means to push the price of oil or any other security. Of course, there are other reasons too. However, no trend continues forever. On the one hand we could see oil going to 60 bucks per barrel and stay at that level for quite a while. On the other hand, we could see gold bottoming in the area of 1000-900 per ounce. You should remember that gold is a currency as well as cash and in such troublesome times as these you should invest in gold. I mean you should possess it in physical forms. Silver is an alternative, of course, if you cannot afford buying gold. At some point, we might see nations collapsing economically due to debts in government sector.

For the time being, more pressure will be coming to both commodities. If you are a swing trader you should consider selling gold at resistance of 1220-1180 (previous support, now resistance) level down to 1000 level. Selling pressure may come as early as the beginning of next week.

Now, oil is currently at resistance. The commodity ended the week at resistance and you might expect oil to start falling to new lows from these levels. We are in a downtrend and you should only sell rallies when downtrend is in progress. Price may do some topping process at these levels, but I am pretty sure that it will go through the floor sooner rather than later.

Trend trade in usd/cad

New Year has begun and new trends are emerging in financial markets. Last year was very good for shorting Japanese Yen as well as Australian Dollar across the board. I am not sure whether this tendency will continue this year, but we can be almost sure that another trend is starting and that is Canadian Dollar downtrend. Let me look at usd/cad currency pair today. 

Should you look at a weekly chart of the security you would see that usd/cad dollar after a sharp fall (in 2009) and the downtrend that lasted till 2010 has been in a large range for over three years. What you should know is that the longer a security stays in a range, the stronger the trend will be after it breaks out of its’ range. 

You may also watch a video how you can trade volatile trends, which was the case with this particular currency instrument.

In a way the pattern that you can see on a weekly chart resembles inverted head and shoulders. This should have given us a clue that a downtrend is over and at some point we are going to see price break upwards. This also tells us that a new bullish trend will start. We simply need to define that critical point which broken will let us know that a bullish trend is in progress. 

In usd/cad case it was 1.0700 level. You can see from a daily chart that at the end of 2013 the price hung around the area and formed a bullish triangle. Look at 4 hour chart to see the pattern better. 

Trading the pattern is not really difficult. You simply have to place a buy order above the upper trendline of the bullish triangle with a stop below the lower trendline of the triangle and move with the trend when the pattern is broken upwards. This is precisely what happened on the 7^th of January this year (2014). 

Therefore, I can state that we are in a bullish trend and the minimum target is 1.1700 level (around 1000 pips above the break point). Of course, the will be some resistance levels along the way and we should not get scared of that. However, I do expect a strong move, because as I said when patterns that are 3 years in length broken the moves are very strong and do not end after a few hundred pip advance. 

I will be adding to my position along the way and I will keep you updated on that. I likewise see some bearish powers in progress in New Zealand dollar, but I will expand on that in my future posts. See you soon. 

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Disclaimer

Trading financial markets carries a high level of risk, and may not be suitable for all investors. All information on the blog http://trend0.blogspot.com/ is of educational nature and cannot be considered as advice, recommendation or signals to trade in any financial markets.