Technical analysis: key levels for gold and crude

Oil is still the asset to watch, given its importance to the equity market, with a possible turn lower in the offing. Meanwhile gold prices are unable to push higher despite a good try last week.

Gold smelter
Source: Bloomberg

Gold in the balance
Key gold areas to watch early on this week are $1220 and then $1200, both of which have provided support over the past two weeks. However, attempts to break above $1240 have also proved fruitless, so for now the picture remains unclear.

An ongoing decline in the relative strength index inclines us to a negative view of the situation, with a move at least as far as $1200 on the cards if selling gathers pace, and then perhaps on to $1192  (key support in mid-February, having been resistance in October last year) and $1180.

Gold chart

Brent still stumped by $36
We saw a good Brent recovery over the past few days, but the real challenge, breaking and closing above $36, still eludes oil bulls. If the price moves back below the longer-term trendline, then we could see a move back to the 50-day simple moving average (SMA) at $33.63, and then on towards $32.50, key support over the past two weeks (with weakness in oil imperiling the rally in equities). A move above $36 takes us on to $39 and the high from the very beginning of the year. 

Brent crude chart

WTI sellers seem to have the initiative
Since the end of January, $34/$34.50 has capped WTI progress, and it proved to be the same on Friday. A lower open today risks handing the initiative to sellers, with the 50-day SMA ($32.43) providing some support in the short-term.

If this is broken we look towards $31.40 and then $30 as support. Below $30 puts the price back into the definitive downtrend off the November highs. 

WTI crude chart

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