61.8% Fibonacci Retracement Completes at $3,104
Although the next potential support zone is around the 61.8% Fibonacci retracement of a short upswing at $3,104, the measuring objective from the pennant is somewhat lower – below a couple key potential support zones. That could be a sign that selling behavior may surprise to the downside. Nonetheless, it increases the chance that the higher support zone may be reached before the bearish correction is complete.
50-Day Moving Average at $3,080
Given the evidence of bearish momentum that returned today, it looks like the next potential support zone around the 61.8% retracement could be tested soon. If it fails to hold as support the next lower price zone identified on the chart is around $3,080 to $3,073, consisting of the 50-Day MA and the 78.6% Fibonacci retracement level at $3,073. Note that the 50-Day line is starting to rise above the 78.6% level.
Weekly Bearish Reversal Triggers
Not only was there a bearish signal on the daily chart, but also the weekly chart. A weekly bearish shooting star candle triggered today on a drop below last week’s low of $3,260. That is another bearish sign for crude oil. When both the daily and weekly charts line up as they did with the drop today, it indicates the potential for aggressive selling behavior as underlying demand falls off.
Pennant Pattern Points to $3,027
As noted above, the measuring objective for the bear pennant points to a potential lower target. It shows a target around $3,027. Although targets are one of the least reliable indications, the lower target points to increased downside risk for gold. Whether it is eventually reached or not, it is a bearish sign. Indications that gold was getting closer to unsustainable overbought conditions occurred with a bull breakout of a rising trend channel during the first half of April, that failed today. Gold fell back into the channel today on a drop below the top blue channel line.
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