Trading strategies for crude oil and zinc by Tradebulls Securities

Any trend reversal for crude oil will only be validated below the 4,350 region

Gold

There are two challenges for Gold. Until now, gold had to fight rising bond yields but now momentum has started in US dollar which is another challenge for gold. Positive investor sentiment that the US economy will see a stronger-than-expect recovery is pushing the US dollar index above 91, its highest level in four weeks. Gold market will struggle as long as it is below $1,760 and if it breaches $1,700, then we may see prices getting pushed till $1,680-$1,660.The latest stimulus measures are bullish for gold in the long-term as they are expected to push inflation higher but in short term, gold is still struggling.

Silver
 

After receiving a wave of retail attention earlier this year and briefly trading above $30 an ounce, silver's interest is fading. There is some shortage of silver as there is not much silver at any refineries and getting your hands on physical silver is still difficult. But Silver still needs weak US dollar to thrive and because of strong US dollar, silver is also struggling. Short-term, we are still bearish as in four hour chart, it is trading below 10 EMA.

Crude oil
 

Crude oil prices have retraced back  ahead of the data release as the oil markets fear that OPEC+ may loosen its supply restrictions at a time when China’s thirst for oil imports appaears to be waning. Strong US dollar is also putting brakes on crude rally. Hedge fund has been net buyers since last 15 straight weeks and now they have turned from net buyers to net sellers. The uncertainty that the upcoming OPEC+ meeting that could result in an agreement to boost production is dampening prices.

Natural gas
 

Natural Gas prices have rebounded after cold weather came in US, however, the weather is expected to remain short-lived.  Short-term momentum has turned positive as the fast stochastic generate a crossover buy signal and moved out of oversold territory. Supply has risen but lower than last week.

Recommendations

Buy Zinc | TGT: 228 | Stop loss: 219

Zinc has made ‘Hammer’ Candlestick pattern after falling from highs of 235 to 216. The formation of Hammer candlestick pattern suggests that buyers have taken control and the low of candlestick is the technical stoploss with which one can go long in Zinc. So, we recommend buying with expected target of 228 and stoploss of 219 on a closing basis.

Sell Crude below 4,300 TGT: 4,100 | Stop loss: 4,400

Crude oil, after reaching overbought zone, has retraced back but trend reversal will only occur below recent swing low of 4,300. That would show classical breaking of higher high and higher low formation that crude oil is displaying on daily chart. 20DMA also comes around 4,350, so any trend reversal will only be validated below that region. So, we recommend short sell only below 4,300 for expected target of 4,100 and stoploss of 4,400.

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