Metal and Energy Charts Pointing to Lower Prices

02/17/2010 12:01 am EST

Focus: COMMODITIES

Last week ended on a positive note with stocks and commodities pushing higher into Friday’s close. The market overall is looking very unstable here, and this week, I figure there will be some big price movement.

Below are the charts on the DIA, GLD, SLV, UNG, and USO funds so you can get a feel for the trends, and additionally, what I am looking for this week with respect to prices.

Diamonds Trust (DIA): Daily and 60-Minute Chart

The Dow, along with the other indexes, has formed a bear flag and can be seen on the daily and 60-minute intraday charts below. This price pattern is a negative one and points to lower prices in the coming week.

If we get one more thrust down, I figure it will spook the rest of the weak hands, which in turn is a setup for a very nice multi-week rally. If this flag turns into a rally, then we will simply wait for a pullback and buy when there is a low-risk setup.


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SPDR Gold Trust (GLD): Daily Chart

Gold has been doing much the same as the other stock indexes and I feel the same will happen here. We could see price rise for another day or two as it tests our blue resistance level before heading lower.


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iShares Silver Trust (SLV): Daily Silver Chart

Silver has formed an interesting pattern the past few months and has now broken down. Silver’s chart continues to look weak as it drifts up to test resistance with a bear flag pattern that points to lower prices in the coming days, much the same as gold.


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NEXT: Timely Look at Popular Oil and Natural Gas ETFs

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United States Natural Gas Fund (UNG): Daily Natural Gas Chart

Sorry for all the lines on this chart. It looks like a mess, I know, but it does show a possible trend change in UNG.

The trend has been down for over a year, but now it looks as though it’s forming a reverse head-and-shoulders pattern and possible bull flag. These two patterns point to much higher prices in the coming months.

Natural gas seasonally rallies in mid-February into mid-April, so this could be something we could catch for a multi-month play. I may provide a stock to trade this rally in gas in addition to the ETF fund in the coming days or weeks, whenever this play unfolds.


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United States Oil Fund (USO): Daily Crude Oil Chart

Oil has been selling down very strong for the past six weeks, but it is now trading at a key pivot point. Oil looks as though it’s trying to bottom here, and in the next one to two weeks, I think the energy sector will provide some great trades.


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Trading Conclusion

Overall, the market and metals bottomed last week, or they have another leg down, which I expect would happen this week if that’s the case. The charts are pointing to lower prices still. If the market does rally, then we will simply watch the breaking and buy the pullback in one or two weeks once there is a low-risk setup.

By Chris Vermeulen of TheGoldAndOilGuy.com

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