Simple Short Term Trendlines in Crude Oil and Gold Prices

Apr 12, 2010: 10:04 AM CST

Sometimes it’s helpful to pull all the indicators off the charts and take a ‘pure price’ look at a market or stock, which can not only give you additional perspective, but can clue you in to dominant trendlines that you might be missing if you have all sorts of indicators over your charts.

Let’s take a moment to look at the ‘pure price’ recent rallies – as seen on the 30-min charts – of Gold and Crude Oil futures prices and the trendlines that have developed.

First, the powerful rally in Gold prices:

There was a shift or change in angular momentum (trendline angles) from the end of March to the most recent action, and that highlights the acceleration in momentum as price has continued its rally.

What’s important now is to see the dominant short-term trendline boundaries exist here at $1,160 for support (where we are currently, which could see a bounce in gold prices) and $1,175 (which will continue to expand if price continues its rally).

The current trendlines reflect a parallel trend channel which tends to be more stable.

The implication – of course – is that trendlines are expected to contain price until clearly broken, which will imply a change in short-term trend (look for a downside break rather than an upside break… and upside break would imply a near vertical rally).

Next the powerful rally which was broken last week in Crude Oil:

Unlike Gold, crude oil did break beneath its lower trendline on April 7th and has been in a correction/consolidation mode ever since.  It’s also a good example of how structure changes once price breaks dominant trendlines.

There are new trendlines established at the $85.50 (resistance – declining) and $84.00 (horizontal) level, and price is almost exactly in-between these two short-term boundary lines.

A descending triangle price pattern could be forming, but we’d need the trendlines to converge more to feel more confidant about that pattern.

Until then, watch both boundaries for clues and price bounces going forward.

Corey Rosenbloom, CMT
Afraid to Trade.com

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

5 Comments

5 Responses to “Simple Short Term Trendlines in Crude Oil and Gold Prices”

  1. bizcon Says:

    Hi,

    Very simple and effective observation. What about concomittant behaviour of these two important commodities? Have they broken relationship for a while?

    Sharad Kapadia
    India

  2. bizcon Says:

    Hi,

    Very simple and effective observation. What about concomittant behaviour of these two important commodities? Have they broken relationship for a while?

    Sharad Kapadia
    India

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