Technical analysis: key levels for gold and crude

Gold is heading into a crucial area of support, with a bounce needed if we are to avert a sharp sell-off. Meanwhile, Brent crude could give us a buying opportunity after yesterday’s break higher.

Gold heading towards critical support zone

Gold has continued its decline, with the failure to break through $1326 leading us to yet another move to the downside. This has brought us within reach of the crucial $1307 support level.

The $1303-$1307 zone represents the lower boundary of a four-month range, where a break below would likely spark a strong move lower for gold. Until this happens, there is a good chance we will see another move higher before long. Look out for the creation of a new higher high to signal the beginning of a bullish phase. That would currently come with a break through the $1320 swing high.

Brent retracing after yesterday’s breakout

Brent attempted to break free from the recent period of consolidation, with the price hitting a new three-year high.

However, this move has proved fleeting, with the price now turning lower. This could provide us with a good opportunity to go long on this market, with Fibonacci retracements coming into play as potential buying levels. Thus, watch for the 61.8% ($73.86) and 76.4% ($73.46) retracements for that purpose. A break below $72.49 would negate this bullish short-term view and bring us back into the consolidation phase.

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