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Analysis

Oil and gold test key supports, Dow seeks a bottom reversal

gold and oil

Major commodity prices, including oil and gold, retreated sharply from near-term highs, amid positivity towards ceasefire talks between Russia and Ukraine. WTI futures plunged 23%, to just under $100 per barrel, from a 14-year high at above $130, while gold price shed $120 per ounce, or 6%, from a 19-month high at $2,070.

At the same time, the stock markets are trying to find bottoms, giving relief from worsening inflation concerns on falling commodity prices. The US bond yields jumped to the highest level since July 2019, with the 10-year Treasury yield rising to above 2.1% ahead of the FOMC meeting later this week, when the central bank indicates to raise the fund rate by 25 basis points, to 0.5%.

Oil and gold face ongoing downside pressure

Oil markets lose traction as major parties, including Ukraine, Russia, US and China are open to dialogues, aiming to a ceasefire. Both WTI and Brent crude accelerated falling after US and Chinese officials met for a “substantial discussion” earlier today.

Crude Oil West Texas (WTI) - Daily 

Key technical elements:

  • The uptrend is facing a breakout pressure and testing on the trend line, with support at $97-$100.
  • The 50.00% retracement of Fibonacci (by connecting the bottom on December 2 and the top on March 7) provides pivotal support at the same level as the trendline.
  • MACD formed a dead-cross, which is a strong sell signal.
  • RSI crossed down below the middle line at 50.0%, supporting an ongoing selloff pressure.

Potential pivotal price levels:

Supports: $97, $93, $88.77

Resistances: $100, $102.87, $105.07

Gold retreated sharply as safe-haven demand faded on positive expectations towards a ceasefire. A strong USD and rising US bond yields also impose ongoing pressure on the precious metals prices.

Gold – Daily 

Key technical elements:

  • The uptrend is facing a breakout pressure and testing on the trend line, with support at $1,945.
  • MACD formed a dead-cross, indicating a strong sell signal.
  • Stochastic formed a double-top, trending down below the middle line at 50.00%.

Potential pivotal price levels:

Supports: $ 1,945, $ 1,924, $1,890

Resistances: $1,958, $2000

Dow looks for a bottom reversal

US stocks are looking for an opportunity for a bottom reversal since the geopolitical tensions are somehow somewhat overshadowed by the upcoming FOMC meeting. Bank and industrial stocks saw benefits from rising bond yields and falling commodity prices, which support the two sectors' heavy-weighted index, the Dow Jones Industrial Average, to rebound.

US 30 (Dow) - Daily 

Key technical elements:

  • The downtrend is still intact, with the imminent potential resistance on the trendline, as well as the middle band of the Bollinger band, at $33,500.  
  • MACD indicates the bearish momentum is fading off, with a golden cross to be formed.
  • Stochastic trends up from oversold territory, while price was moving in a downtrend, which forms a bullish divergence pattern, indicating a strong bottom signal.

Potential pivotal price levels:

Resistances: $33,500, $34,000, $34,530

Supports: $32,800, $32,200


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