Outlook & trading strategies for Silver, crude oil by Tradebulls Sec

Gold has recovered smartly above its psychological level of $1,700 and also above 50-day EMA after US Federal Reserve’s meeting where the Fed said it was not going to raise interest rate in near future. I believe it is only a matter of time before we break out to the upside due to the central bank liquidity issues around the world and dovish view of the US Fed. Gold has not been subjected to the selling pressure as seen in US Dollars. The US dollar has gotten a little bit of a hit as of late as reopening of economies have made investors more risk takers and dumping safe US Dollar. Above 46,800, we can see gold till 47,200-47,500, and any selling pressure now can only be seen below 46,000.

Silver has made harami candlestick formation on daily charts after falling from 51,000 to 47,000 so there is some support around that level. Now this pattern will only be invalidated below 47,000 so we may see more selling pressure below that level. On the upside, momentum may increase above 48,800. Equity rally is giving headwinds to silver prices despite being an industrial metal, and, I believe, silver will also grind higher tracking footsteps of gold.

Crude oil has retraced from overvalued levels but we have not seen any major price correction. There is short-term fear of oversupply after US API showed a rise in crude oil inventories. Prices are expected to remain at current levels but any further upside will be difficult as Saudi Arabia, Kuwait, and the United Arab Emirates said they would not continue further voluntary reductions of 1.18 million barrels per day. OPEC+ has also decided to keep production cut till July-end instead of August-end, so, they are not looking to extend production cuts as prices have risen from lows which will be near-term ceiling for the crude oil market.

Natural Gas is stuck in limbo with floor protected by producer shut-in and the ceiling capped by LNG economics. LNG exports are getting hit as European gas storage is full as LNG exporters looking at Asia. We won't see LNG export pick-up until late August into September. We expect prices to drift towards 127-126 before we may see some support coming in. Short-term trend looks weak with lower high and lower low formation and once prices reach 127-126, we can take a call of going long.

Recommendations
 

Buy Silver around 48,150 | TGT 49,500 | Stoploss: 47,700

After touching a 20-day moving average on the daily chart, silver prices have bounced back around 48,500. It is trading above 5-day moving average and RSI_14 is at 59. There is no divergence on the daily scale and prices have breached 2-day high following ‘Doji candlestick pattern’. So, we recommend going long around 48,150 for the expected target of 49,500 and stoploss of 47,700.

Sell Crude Oil | TGT: 2,680 | Stoploss: 3,200

Crude oil has witnessed stellar rally where for eight weeks, we have seen positive gains. Hanging man candlestick pattern at 2,980 indicates a pause in the uptrend. Negative divergence is seen in RSI_14 on the daily scale and the next target for the market would be its 20 DMA as, since May 4, prices have not touched 20-DMA, indicating strong up-rally. So, we recommend short for the expected target of 2,680 and stoploss of 3,200.

Disclaimer:  Bhavik Patel is Sr. Technical Analyst (Commodities) at Tradebulls Securities. Views are personal.