Bear markets not over for crude oil and gold
Crude oil and gold both rose higher than we indicated in our late February forecasts, causing us to revise our wave counts on daily and intraday time frames. Of the two commodities, crude has followed our expectations more closely. We are still waiting for gold to turn downward.
The very slightly higher high in crude oil on March 6 compared to February 13 led us to reposition the wave [II] label as shown. After the high was set, price began declining strongly in the anticipated wave [III] which probably isn't finished yet.
Based on the internal wave structures, we believe the market is currently working through the late stages of upward/sideways sub-wave (IV) of [III], to be followed by downward sub-wave (V). Similarly we think the next order of fractal has yet to produce its own waves [IV] and [V].
Readers here who trade on daily and intraday time frames will probably find opportunities in both directions during the next two or three weeks as the nested fractal patterns play out. Our preferred support targets for the final wave [ii] low wait near 57.70 and 50.85, with 46.88 as a stretch target.
The adaptive CCI momentum indicator on the 240-minute crude oil chart showed a nice positive divergence ahead of the current bounce that is internal to sub-wave (IV), but the divergence probably doesn't mark the final low of the sequence. Typically we would not count the entire five-wave downward structure to be complete until the indicator has tested the zero line at least once from below or ideally has spent some time with green bars above the zero line. Our expectation would be similar for wave [IV] and the momentum indicator on a daily chart.
Gold climbed considerably higher than we expected. Moreover, the structure up from the November low is ambiguous. Our preferred scenario treats the pattern as a corrective wave (iv), as shown in the wave count with black labels. Alternatively, it also can be counted as an upward impulsive wave (i), as shown with blue labels. Both scenarios call for price to turn downward soon, but the alternative path would have it put in a higher low compared to 2022.
Cycles suggest the next low should occur around June or July. Tentatively support near 1,787 marks the area to watch if price is to make a higher low, and our preferred target zone for a lower low is from 1,550 to 1,524. The decline should consist of three sub-waves regardless of which scenario is operating.
In the very near term, gold might reach a little higher to test the resistance levels marked from 2,023 to 2,037 or even the area near 2,056 and 2,068. A break and daily close beneath 1,970 can serve as initial confirmation of a downward reversal.
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