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What A Wyckoff Change of Character May Mean For Gold And Crude Oil

Both gold and crude oil have been on a parabolic rise in the last 2 weeks due to the war between Russia and Ukraine. On 9 March 2022, a Wyckoff change of character bar showed up in both gold and crude oil also represented the largest bearish bar since the uptrend, acted as a stopping action for the uptrend. While the automatic reaction (AR) is unfolding, a short-term trading range could be anticipated for gold and crude oil.

Gold Price Forecast with Wyckoff Method

Since mid of January 2022, gold outperforms S&P 500 as shown in the relative strength chart (circled in green in the lower pane). After breaking out from the apex formation in mid of February 2022, gold entered into a parabolic rise and almost tested the all-time high level at 2089 on 8 March 2022 with a buying climax (BC) and spike of volume followed by an automatic reaction (AR), which is still unfolding. Refer to the chart below:

The automatic reaction is part of the change of character, which stopped the parabolic run in the short-term. This is the largest down-wave since the beginning of the uptrend in January 2022. A trading range could be anticipated (annotated in orange) based on the high and the low formed by the buying climax and the automatic reaction.

According to the Wyckoff phase analysis in a larger perspective since August 2020, the uptrend from January 2022 could be phase D sign of strength rally pending a backup action (the anticipated trading range as annotated in orange) before completing the accumulation structure. This is a bullish structure with plenty of upside ahead.

Yet, a trading range between 1960-2080 is expected in the short-term. Refer to the Wyckoff method video to find out the details of interpreting the price action and the volume to predict the market movement, which can be adopted in any instruments and timeframe.

Crude Oil Price Forecast with Wyckoff Method

Similar to gold, crude oil has been on a parabolic move up since March 2022 and experienced a change of character on 9 March 2022, which is likely to signal a temporary pause of the uptrend. A trading range between 100-130 could be expected (annotated in orange) in the short-term. Refer to the chart below:

The buying climax (BC) formed on 7 March 2022 together with the parabolic run-up was the first alert for a potential pullback as profit-taking activity kicked in because of the unsustainable nature of the parabolic move.

After the consolidation, crude oil is likely to resume its rally to test the all-time high level near 150. Having said that, it is crucial to watch out for the characteristics of the price action and the volume to avoid any potential bull trap, which happened in S&P 500 last week.

Bullish And Bearish Trade Setup For Trend Trading

Despite the market sentiment being bearish, there are still plenty of trading opportunities for trend trading in both directions, as shown in the snapshot of my stock screener below.

The majority of the bullish stocks experience shallow pullback, consolidation or even buck the trend as the market is going down. These stocks are expected to outperform when the market flips to an upswing. Should you plan to short the bearish stocks, watch out for the position size based on the risk taken as the magnitude of the rally in a bear market, especially for deeply oversold stocks can be sharp and fast. Visit TradePrecise.com to get more market insights in email for free.