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If you want to get in on this… be sure to watch the replay now. This briefing will only be available for a short time.

Two Charts to Watch This Coming Week

By Larry Benedict, editor, Trading With Larry Benedict

Two commodities have been capturing investors’ attention: gold and oil. However, they’ve had very different profiles in recent years…

Gold has been in an upward trend since 2023. Back in April, it briefly broke through $3,500 – its all-time high. But since then, it has been stuck in a consolidating pattern.

By comparison, oil has traded in a tight range for several years. Its April low this year saw it languishing at the same level it was back in 2023.

Then the recent hostilities in the Middle East saw it burst higher at the start of this month. It just as spectacularly reversed lower this week. And like gold, it too is now struggling to find direction.

So today, I want to check in on these two charts to see what’s coming next…

Gold Is at a Key Level

The 50-day Moving Average (MA, blue line) in the chart below shows the long-term uptrend for the SPDR Gold Shares ETF (GLD).

After a consolidating period at the end of 2024, the 10-day MA (red line) briefly tracked below the 50-day MA. Then GLD resumed its rally in January.

The 10-day MA accelerated higher, pulling the 50-day MA higher too…

SPDR Gold Shares ETF (GLD)

Source: eSignal

(Click here to expand image)

Throughout GLD’s rally, the Relative Strength Index (RSI), a momentum indicator, bullishly stayed in the top half of its range (above the green line).

Plus, any pullbacks stopped and reversed when GLD bumped into the 50-day MA (gray arrows). In effect, the 50-day MA acted as a support level.

But GLD is now fighting to hold the 50-day MA level (the farthest right arrow). That comes as the RSI is also testing support (orange circle).

GLD’s rally is hanging in the balance. And what happens next with these indicators will be key…

For GLD’s rally to remain intact, we’ll want to see both support levels (RSI and 50-day MA) hold.

If the RSI breaks into its lower band, that would likely set off a pullback. We’d then look for the 10-day MA to cross and accelerate below the 50-day as confirmation of an emerging down move.

GLD breaking below the May 16 low (middle arrow) would add further weight to a down move.

The key is to not rush in and instead keep a close watch on those indicators and let them dictate potential trades.

Now let’s look at oil…

The Oil Price Popped

In the chart of the United States Oil Fund (USO) below, you can see that oil accelerated sharply in June after languishing around its lows.

You can gauge the power of that rally by the rate at which the 10-day MA crossed and accelerated above the 50-day MA. It was almost at a right angle.

That move coincided with the RSI leaping higher off support…

United States Oil Fund (USO)

Source: eSignal

(Click here to expand image)

But the RSI marked USO’s peak and reversal. It inverted from overbought territory and fell almost vertically. It’s now back on support (orange circle).

When you see a sharp drop like that, you need to remain especially cautious…

When something peaks and reverses like this, you can fall into the trap of thinking that it’s now at a “cheap” level. If USO was trading upward of $84, then surely it’s cheap at around $72 just a few days later? But that can be a big mistake.

Expecting a price pattern to repeat is typically a low-probability play. It can be particularly frustrating to buy back into a move only for it to collapse and take another leg down.

Of course, when it comes to the Middle East conflict, anything can happen. So you need to be careful in how you play it from here…

We want to see price consolidation and the RSI holding support so USO forms a base. If the RSI breaks lower instead, USO could quickly trade back around the $68 level.

That would then bring another set of circumstances into play…

In that case, we’d have to wait for the RSI to fall near oversold territory and then decisively break higher before considering any long trade.

The key with GLD and USO is to not get sucked into a move for fear of missing out.

We should only consider entering a trade when the right technical signals line up.

Regards,

Larry Benedict
Editor, Trading With Larry Benedict