In his Jim's Trading Strategy, sector expert Jim Farrish looks at some of the key indicators and sectors for traders to watch, highlighting potential downside risks in gold and energy.

Crude Oil had pushed higher on hope around OPEC renewing the production cuts…that has become a renewed worry and the selling returned the last two weeks.

The close below the $50 mark is a negative. The short side entry was hit at $50.70 break of support. (No trades on the move.)

The speculation is driving and that is a tough trade technically and fundamentally for my risk profile. Watching how this unfolds and letting the emotions work out near term. Testing support in the $48-49 level. If the OPEC agreement gets done…oil is likely to bounce on the news. Patience is the key for now.

Energy stocks — as seen by the Energy Select Sector SPDR (XLE) — have fallen since the December highs as the OPEC deal to cut production has not resulted in any real measurable cut that would impact prices.

The support at the $67.75 level is back in play as the uncertainty over OPEC deal has resulted in the sellers returning and pushing the sector lower. A break lower opens the short side trade again in the sector. Is the sector breaking support?

Gold — as seen by the SPDR Gold Trust (GLD) — took on a new dimension of worry with the stronger dollar and talk of rate cuts hitting the metal. That changed with a move lower in the dollar pushing the metal higher off the test of support at $114.

Cup and handle pattern on GLD broke above the $120.45 mark of resistance giving a second entry signal. Watching how this unfolds currently as investors push the metal back towards the $120.45 support.

Watching the direction based on interest rates, the dollar, and global markets currently. GLD entry $120.50, stop $$119.50 (adjusted). Miners have turned lower on worry around gold prices. Gold fell below support and we are watching to see how this unfolds.

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