Technical analysis: key levels for gold and crude

Commodities bounce back after the dollar led downturn midweek. Is this the beginning of another move higher for gold and crude?

Oil
Source: Bloomberg

Gold rallies from key Fibonacci support

Yesterday saw gold break through a cluster of support trendlines, only to find support from the 76.4% Fibonacci retracement. The long lower wick indicates a possible bottom in place, an idea which will likely be tested today. As such, the ability to retain and build upon those gains will be crucial today.

The creation of a new higher low and closed hourly candle above the overnight high of $1259 would provide us with expectations of a strong move higher in the coming trading days. Much will also be down to the strength of the US dollar which has been negatively affecting this market over the past few days.

Look out for potential trendline support and the ability to break through $1259 as a strong bullish signal.

Gold

US crude heads for multi-month highs

US crude turned higher upon retracing 61.8% yesterday, with the $49.53 resistance level now standing in the way of creating a new seven-month high. Clearly the uptrend remains in play and thus a closed hourly candle above $49.53 would provide us with a strong buy signal for the day.

Alternately, a closed hourly candle below yesterday’s low of $47.25 would provide a more bearish outlook, with $46.16 the next important support level to the downside.

US crude

Brent rallies from 76.4% pullback

A similar situation for Brent saw a pullback to the 76.4% retracement and subsequent rally overnight. Again, the key is whether we can see an hourly close above $50.15 for a bullish continuation signal.

Alternately, a closed hourly candle below $47.72 would provide a more negative view, with $47.00 the next key support level.

Brent

The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication.