Oil & Gold Weekly Technical Outlook

ONG Focus - Technical. Written by Oil N' Gold

Nymex Crude Oil (CL)
Crude oil rose sharply to as high as 78.75 last week and closed strongly. The break of 75.0 resistance confirms that medium term rally has resumed. Initial bias remains on the upside this week and further rise should be seen to 100% projection of 58.32 to 75 from 65.05 at 81.72 next. On the downside, below 76.80 minor support will turn intraday bias neutral and bring retreat, probably to 4 hours 55 EMA (now at 73.98). But downside should be contained by 71.39 resistance turned support and bring another rise.

In the bigger picture, the strong break of 75.0 resistance confirms that medium term rebound from 33.2 has resumed and further rally should be seen. Note that crude oil is now in an important resistance zone of 76.77/90.24 (38.2% and 50% retracement of 147.27 to 33.2). As we're expecting rise from 33.2 to conclude in this zone, we'll look for sign of loss of momentum in the current rise, as well as reversal sign. Nevertheless, note that break of 65.05 is needed to indicate that crude oil has topped out. Otherwise, further rise is still in favor.

In the long term picture, there is no change in the view that fall from 147.27 is part of the correction to the five wave sequence from 98 low of 10.65. While there rebound from 33.2 is strong and might continue, there is no solid evidence that suggest fall 147.27 is completed and we're still preferring the case that rebound from 33.2 is merely a corrective rise only. Having said that strong resistance should be seen between 76.77/90.24 fibo resistance zone and bring reversal for another low below 33.2 before completing the whole correction from 147.27.

Comex Gold (GC)
Gold edged higher to 1072 last week but retreated since then. A short term top might be in place with bearish divergence conditions in 4 hours MACD and RSI. Some more consolidation would likely be seen initially this week, with risk of further pull back. But after all, we'd expect downside to be contained by 38.2% retracement of 931.3 to 1072 at 1018.3 and bring rally resumption. Above 1072 will target 1100 psychological resistance next.

In the bigger picture, the strong break of 1033.9 high confirms that long term up trend in Gold has resumed. Rise from 681 would likely develop into another set of five wave sequence with first wave completed at 1007.7, second wave triangle consolidation completed at 931.3. Rise from 931.3 is expected to extend to 61.8% projection of 681 to 1007.7 from 931.3 at 1133.2 first and then 100% projection at 1258 next. On the downside, though, break of 985.5 support will dampen this bullish view and will turn focus back to 931.3 support instead.

In the long term picture, as discussed before, rise form 681 is treated as resumption of the long term up trend from 1999 low of 253 after interim consolidation from 1033.9 has completed in form of an expanding triangle. The strong break of 1033.9 resistance affirms this case and should pave the way to 61.8% projection of 253 to 1033.9 from 681 at 1160 and then 100% projection at 1460 level. We'll maintain this bullish view as long as 931.3 support holds.