Key Prices to Watch on GLD and USO April 19

Apr 19, 2010: 10:27 AM CST

One thing stock market traders may have missed in the wake of the Google and Goldman Sachs sell-off Friday was that gold and crude oil prices also suffered similar declines as the stock market.

With that in mind, let’s take a quick updated look at the daily charts of GLD (Gold ETF) and USO (Crude Oil ETF) to see what levels are important for us to watch.

First, Gold GLD:

Quick sleuthing tells us that we need to be watching the $110.00 level as potential and key support, as that is the 50 day EMA but also the confluence of the rising ‘arc’ trendline as I’ve drawn.

A break under $110.00 could send us back to test lower support at $106.00.

However, the upper level to watch for a breakout remains the $114.00 per share level – the recent high and also prior price high from January.

It would be logical to expect a test of the highs at $120.00 perhaps if we do get a confirmed breakout above the price resistance at $114.00.

Finally, Crude Oil USO:

USO is not as ‘clean’ chart-wise as GLD, but we take what the charts give us.

Price broke above the $42.00 price level only to collapse back into the trading range, forming a potential bull trap – that’s not good for buyers.

However, the lower support level to watch on USO is $39.50, which is the 38.2% retracement as drawn but also the rising 50 day EMA (actually at $40.00).  It’s also the support of a short-term rising trendline (not drawn).

A move under $39.50 could see a retrace back to the next support confluence at the $38.00 level… and lower if price breaks under $38.00.

We see the similar negative volume divergence in USO as we do in the broader stock market ETFs (SPY, DIA, QQQQ, etc).

For detailed analysis and charting on the monthly, weekly, and daily frame, take a look at our premium Weekly Inter-market Report service.

Corey Rosenbloom, CMT
Afraid to Trade.com

Follow Corey on Twitter:  http://twitter.com/afraidtotrade

5 Comments

5 Responses to “Key Prices to Watch on GLD and USO April 19”

  1. TheYenGuy Says:

    A yen carry trade reveral caused a speculative investment sell off at market open … Currency traders went short the commodity currencies today, that is the Canadian Dollar, FXC, and the Australian Dollar, FXA, the Rand, SZR, and the Ruble, XRU, causing an early morning downturn in the resource sectors Metal Manufacturing, XME, and Steel, SLX, and Canada, EWC, Australia, EWA, Russia, RSX, and India, INP, as well as oil Oil, USO.

    But then at 12:30PM, the traders reacted postivively to March's 1.4 rise in the Conference Board's index of leading economic indictors: the market exploded higher.

    The currency monetized (inflated) shares, Europe Emerging Market, GUR, Nasdaq 100, QTEC, Semiconductors, SMH, Russell 2000, IWM, Small Caps, RZV, Chinese Small Caps, HAO, Brazil Small Caps, BRF, Airlines, FAA, Retail, XRT, Housing, XHB, India, INP, fell lower.

    It was the Candain Dollar, Australian Dollar and the South African rand that monetized (inflated) oil over the last 90 day … http://tinyurl.com/y3ak6up … so it is not surprising that today oil fell more than gold.

    Certainly gold will fall lower in the short term but the P&F Pattern For GLD manifests as a double top breakout on April 7, 2010 with an objective of 129. So the investor is caught in a quandry; buy gold as it dips lower, or short sell stocks for now. My encouragement is to stay liquid and to buy gold as it dips lower; in any event, I certainly would not wait too long to be in physical possession of gold as I am expecting both a stock and bond market collapse causing a liquidity evaporation where one will not be able to obtain funds in mutual accounts, brokerage accounts or money market accounts.

    More charts and commentary in my article Yen Carry Trade Reversal Causes Speculative Investment Selloff http://tinyurl.com/y35pxgd

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