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Technical analysis: key levels for gold and crude

Gold is getting ready to mount again while oil goes lower despite comments from OPEC. 

Gold bars
Source: Bloomberg

Is gold on its way back up?

Gold appears to be coming back into a bullish phase following a pullback into the 61.8% retracement yesterday. Price is currently forming a bullish wedge pattern, which points towards another move higher. An hourly close above $1239 would be the most important bullish signal, as it would cement both the creation of a higher low and higher high on the shorter-term timeframes.

However, to some extent, it is the $1245 level that needs to be taken out for the uptrend to really start to push on. Until then, a break through $1239 would complete a short-term inverse head and shoulders pattern, providing a renewed bullish outlook, with $1233 utilised as the level to put stops below. Until we break through $1239, there is still a chance we could continue to drift lower, bringing into play the potential for an entry as a retracement of the rally from $1226.

Gold chart

WTI turning lower from resistance area

WTI saw a sharp appreciation yesterday, following comments from OPEC's secretary general. However, despite this fundamental shift, we are seeing the market turning lower from the top end of this range once more. The difficulty here is knowing whether we are set for a breakout, given how far it run past the majority of the previous resistance points.

Essentially, that will come down to whether we see WTI break below $53.94. Should that occur, a bearish outlook is back in play. Alternately, this could be a three-legged correction into the 76.4% retracement ($54.20), before breaking higher once more. The degree to which price has run past that retracement points towards the bearish option being the most likely, yet it makes sense to see how we respond to $53.94.

WTI chart

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