Gold: Bull Trap Follows a Bullish Engulfing Candle – What’s Next for the Metal?
2024.09.19 04:40
hit my expected target of $2599/2602 this week, reaching a new all-time high right at $2599 following the 0.5% rate cut. However, prices quickly tumbled to 2546, creating a bull trap and a bearish engulfing candle on the daily chart in overbought conditions. This illustrates the risk of trading during significant news events.
While this isn’t a definitive sell signal, it serves as a warning for bulls. We may face another period of sideways consolidation in the coming days or weeks, which has become familiar for Gold. If prices break above 2604, we can target 2620/22, but that seems unlikely at this stage. For now, I remain a buyer on further weakness, anticipating profit-taking that could push prices down to the previous all-time high of 2531/2526. I would consider going long there, setting a stop below 2521.
Silver ()
reached $31.25 before unexpectedly crashing to $29.68, leaving a large bearish engulfing candle that erased the gains of the past three sessions. This marks an important bull trap in overbought conditions.
If you entered a long position at support around 3010/2990 and managed to hold through the volatility, we’re now headed towards a first target of 3040, with potential to reach 3070. However, gains may be limited, as yesterday’s move caught many bulls off guard.
It appears we could trend lower as the week progresses, targeting support at 2945/2935. For long positions, set stops below 2920. If this trade fails, we may find ourselves stuck in a longer-term sideways trend, complicating the identification of low-risk trades.
WTI Crude (October Futures)
In the last session, the October contract ranged from 6973 to 7148. As previously noted, was expected to edge higher towards the break point of the longer-term 18-month trend line at 7110/7150. That trade triggered successfully, hitting resistance right at 7110/7150 before reaching the first target of 6990.
I believe we have a good chance to continue lower towards 6890, possibly reaching as low as 6790 by the end of the week. It may also be worth selling if we break below 6840, targeting levels of 6800, 6730/6720, and potentially down to 6660.
If we see a chance to go long at 6550/6500 today, I would place stops below 6400. Target levels would be 6690/6720, 6800/6820, and potentially up to 6870/6900. A break below 6400 would signal further losses, possibly down to the 500-week moving average at 6200.
