Technical analysis: key levels for gold and crude

Crude and gold both track lower, yet with long-term bull trends in place, are we set for another move higher in the coming days?

Gold bars
Source: Bloomberg

Gold continues to trend lower
The metal has been trending lower over recent weeks, with the price breaking a number of trendlines along the way. We have seen another sharp move lower this morning, which brings about the possibility of a retracement higher in the near future. As such, it makes more sense to sell into rallies on the short-term.

However, from a medium-term perspective, this sell-off looks like a potential retracement of the $1227-1303 rally and as such, there is also a case for buying as a value play, given the 4/1 risk-to-reward for a move back to $1303 compared with a break below $1227.

Gold daily chart

WTI into Fibonacci support
The drift lower in WTI overnight has seen a move back into the 76.4% retracement at $47.73. This provides a possible long entry with a view that we will not see a break below $47.26. Ultimately, we are seeing lower highs and higher lows, in a similar vein as a symmetrical triangle.

As such, further upside is favoured and with resistance at $48.24, $48.77 and $49.29. A closed hourly candle below $47.46 would be a warning sign, with a break through $47.26 a more important bearish signal. 

WTI daily chart

Awaiting triangle breakout for Brent
A similar situation for Brent, with a symmetrical triangle in play here. Given the uptrend in place over recent months, an upside breakout is favoured. The safer way to play such a pattern would be to await a closed hourly candle above $48.91 for a bullish breakout, or $$48.03 for a bearish breakout.

Alternately, the overall bullish outlook means we do not expect a break below $48.03 and with that bullish expectation, a 3/1 risk-to-reward for a move into $49.50 rather than to $48.00 seems a good opportunity. 

Brent daily chart

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