Technical analysis: key levels for gold and crude

Gold resilience points to possible upside, yet the fate of global equities and sentiment is in the hands of crude prices which are within close proximity to crucial resistance levels.

Oil pipeway
Source: Bloomberg

Gold resilience highlights possible bullish break

Gold has withstood the rally in crude and equities surprisingly well this week, consolidating into a symmetrical triangle rather than selling off as would be expected given the negative correlation.

Despite this weakening of the correlation, it looks more like a statement about the underlying strength of gold rather than anything else. Thus should we see indices and crude sell-off once more, another rally for gold would seem highly likely.

However, as ever, we are awaiting a breakout and close through the first swing high or low for confirmation of the triangle exit. Thus a closed hourly candle above $1214 would point towards a bullish move, with $1232 and $1263 the next levels of note.

Conversely, a closed hourly candle below $1201 would point towards a move lower, with $1191, $1181 and $1170 the next key support levels. 

US crude reaches crucial resistance level

US crude has been rallying heavily of late, bringing price back to the $33.38 resistance level, where a break would create a new high to follow on from the higher low set on Tuesday.

As such, this is a crucial level to watch for the day, where a break higher could lead all the indices higher and signal another major leg higher for crude.

Thus the $33.38 level will be pivotal to the day’s trade, where either a reversal lower will occur, or a break upwards which would likely lead to another strong appreciation.

Key resistance levels are at $33.38, $33.65 and $34.30, with main support levels at $32.70, $32.00, $30.48 and $27.92. 

Brent resistance a touch higher

Brent is still a little further from the key resistance level, with the $36.00 level crucial to providing an indication that we are set for another big move higher.

It is worth noting that both US crude and Brent would need to break their key resistance levels for the bullish view to be confirmed. Ultimately, we are in a clear uptrend this week, with a closed hourly candle below $34.52 needed to confirm a more bearish view.

Alternately, a closed hourly candle above $36.00 would be needed to confirm a bullish view.

Key resistance levels are $35.96, $36.10 and $36.74, with support levels at $35.02, $34.52 and $33.70.

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