Above 53.37 USD the major trend remains bullish. 62.13 USD and 63.23 USD are in the line of sight. The breaking of 53.37 USD would cancel this anticipation and favor a correction toward 51.18 USD.
The MACD is positive and above its signal line. This configuration confirms the sound positioning of the commodity. We can see that the bullish potential of the RSI has not been exhausted. As for the Stochastics, they are in the overbought area, making a correction likely in the short term. The volumes traded are more than the average volumes over the last 10 days.
The commodity is in a phase of technical recovery. It is above its 50-day moving average but the latter is poorly positioned. In the event of a correction, the first support is at 53.37 USD, before a test of 51.18 USD in the case of a breach. To the upside, the resistance at 62.13 USD is intermediary before the strong level of 63.23 USD.
Moving Averages (MA20 & MA50)
Moving averages are calculated by the addition of the closing price of the N last sessions divided by the number of sessions considered. They can be used to track daily, weekly, or monthly patterns. DayGraph uses 20 and 50 periods. Moving averages provide a good indication of the whole trend affecting an underlying. Reversing situations can be found on the upside and on the downside. Moving averages can constitute supports or resistances by themselves for spot prices.
The MACD (Moving Average Convergence / Divergence) reflects a difference between moving averages and thus makes reference to the ascendancy or not of the mid-term relatively to the short term. DayGraph uses 26 and 12 periods. Moreover, so as to estimate the variations of the trends, an auxiliary indicator (named signal line) is formed. It is based on an exponential average of the MACD on 9 periods. The advantage of this indicator is triple:
RSI is the most popular speed indicator because it is one of the most relevant ones in localizing overbought and oversold periods depending on the investment horizon. A bounded indicator, the RSI calculates the relationship between the average of ups and downs for the days of the period under consideration with a mathematical approximation. Day traders use a 5-minute RSI, monthly market investors use a 5 or 9-day RSI, portfolio managers monitor the RSI for 14 days and some investment funds would even go to the RSI 34. The longer the RSI is, the less the overbought and oversold thresholds are distanced (20/80 for a 9-day RSI, 30/70 for an RSI 14). It also gives excellent divergence signals. DayGraph uses a 14-day RSI.
With a design close to that of the RSI, the stochastic indicators use a greater number of variables (highs and lows for the day). The slow %D used smoothes the variations of the base indicator that is too volatile. Paradoxically, the false signals are often more numerous than for the RSI. The main contribution compared to the latter is still notable though: when the stochastics remain stuck in an overbought area (above 75%) for several weeks, it is recommended not to follow the overbought indications of all the other indicators.
Bollinger bands are trading bands (upper and lower boundary lines) plotted at 2 standard deviation levels above and below a moving average. DayGraph uses 20 periods. Bollinger bands offer a measure of volatility and relative low and high, the bands widen during volatile markets and narrow when volatility decreases. They can provide strong thresholds: resistance for the upper band and support for the lower band.
Level that has a high probability of halting a fall on the time horizon considered, and consequently, possibly to cause a bounce.
Level that has a high probability of halting a rally on the time horizon considered, and consequently, to cause a correction.
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