Technical analysis: key levels for gold and crude

Crude selloff continues apace as both Brent and US crude approach major support levels. Meanwhile, gold remains within a channel as it sells off to the lower end of the range.

Source: Bloomberg

Gold channel remains key
Yesterday’s rally in gold was short-lived, with volatility surrounding the FOMC announcement bringing price back up to the channel top before selling off once more. Thus, price remains within this pattern and is expected to return to the bottom of the range before long.

Price is currently being held up by the 50-hour simple moving average (SMA) and this consolidation is expected to give way to further losses, which would be signaled by a closed hourly candle below $1066.

Support levels of note are $1062 and $1058, whereas resistance levels are at $1067 and $1070.

US crude sells off once more
The selling has continued apace in US crude, with the break through $37.63 support key to yesterday’s trade. We have since seen a gradual drift lower, with little in the way of retracements.

The next key support level is $35.78, below which we would be looking at yet another six-year low. Below that, $33.55 is the 2009 low.

The bearish view remains unless we see an hourly close above $37.22 which would then look towards $37.63 and $37.86 resistance.

Brent falling wedge in play
Brent has been even more consistent with its losses than US crude, forming a falling wedge formation over the past 24 hours. A falling wedge is typically seen as a bullish pattern, which would point towards an upside breakout.

Given the selling in the market, we have not seen any bullish reversal signs yet, but with price approaching $36.74 support there is the possibility of a bounce.

Therefore the bearish view holds, where $36.74 seems the crucial support level, with an hourly close below pointing to further losses. Conversely, a bullish break through the top of the wedge could signal a short-term rally back towards $37.82.

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