December 30, 2021

Reversal Candlestick Patterns on Oil and Silver?

 Who’s up for candle stick patterns on commodities!?


Once again, we’re sticking with the longer-term charts this week with traders apparently already checked out to celebrate the end of 2021. And for today, we’ve got setups to keep an eye on for 2022!


Oil: Daily

After a significant drop in November from highs around $85, oil prices have seen a nice rebound in December after once again finding support around the $65 range


The market is back to the $75 major psychological handle, an area of strong interest in 2021 as it held back the bulls in the Summer, before breaking and acting as support in September and October.



With the market now in a general bearish mood as we close out the year, is this area now going to act as resistance once again?


From a technical standpoint, we can see a bearish candlestick pattern in the works in the form of an evening star candle formation. This is a triple candlestick pattern that may be signaling bullish exhaustion, and with it occurring at a major price level and as stochastic signals overbought conditions, odds are rising that technical bears may act in this area.


Keep in mind though that this happening in an overall uptrend, so any downside moves may be limited to the area between the rising 200 simple moving average and major swing lows around $65.


Silver: Daily

Despite being a high inflationary environment in 2021, silver (XAG/USD) hasn’t been a high flyer as most would have thought given its and gold’s label as inflationary hedges.


Unfortunately for silver bulls that wasn’t the case as XAG/USD has been in steady downtrend since topping out at $30 at the beginning of 2021, likely falling due to a recovering U.S. dollar.



XAG/USD seems to have found a bottom around $21.50 recently, pushing the market back to the $23 handle (a minor psychological area of both support and resistance) where the bears may be taking control once again.


On the daily chart above, we’ve got similar technical signals as what we saw on the oil chart above, an evening star pattern and overbought signal from stochastic, that may draw in technical bears.


And with these patterns forming in an overall downtrend, the odds are higher that sellers may be back for silver, somewhere between $23 up to the falling trendline and falling 200 simple moving average.