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Technical analysis: key levels for gold and crude

Gold weakness brings price into key support convergence, while oil prices rally towards a key Fibonacci resistance level.

Gold bars
Source: Bloomberg

Gold at key support area

Gold has been pulling back sharply over the past two days, yet has tumbled into a crucial support area, with an ascending trendline and 76.4% Fibonacci retracement in play. Given the failure to regain $1357, there is clearly a good chance that we will see another leg lower over the short-term.

However, for that to occur, we would need a break below $1330 to continue this countertrend sell-off. Given the respect of this trendline, it is certainly worth watching to see if the bullish long-term view can feed into the shorter term, with a bounce from here.

Alternately, should we see an hourly close below $1330, then longs around $1322 look attractive. 

Gold

Brent punches higher following deep pullback

Brent has ripped higher, following a fall through trendline support on Wednesday. Interestingly, the short-term head and shoulders pattern reached its target and price subsequently turned higher without breaking the crucial $43.59 support level. While the short-term has seen this market clearly trend higher since the lows earlier this month, the downtrend instigated in early June remains intact unless we break through $48.82.

With that in mind, the $47.11 resistance area looks interesting as a potential resistance level for price to move lower once more. Currently we are seeing some questions being asked at this over-extended area. With the stochastics well overbought, it seems likely that we will see some weakness come into play soon.

With that in mind, while further upside could occur in the short-term, it seems prudent to wait and see how things take shape rather than jumping in here.

Brent

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