Technical analysis: key levels for gold and crude

With gold breaking higher and crude selling off once more, could we be seeing a return to the risk-off sentiment that has dominated the early part of 2016?

Source: Bloomberg

Gold retraces following breakout

The underlying strength in gold came out yesterday with the break and close through $1214, which subsequently sparked a rally to $1240.

We are now seeing that move retraced, yet this is likely to be a temporary move, before another move higher. As such, it seems prudent to look for bullish reversals at key support levels, such as $1217 and $1214.

Resistance levels in this case would be $1232, $1240 and $1263. We would need to see a move back below $1200 for out bullish view to be negated.

US crude sell-off seems likely

Yesterday saw US crude crash below the key $32.86 support level, which is currently being approached as potential new resistance.

This looks likely to hold and as such a bearish view is in play unless we see a move back above $33.97. In particular, a closed hourly candle below $32.25 would give confidence that further downside is to come.

Support levels of note are $32.25, $31.22 and $30.48. Resistance levels to watch are $32.48, $33.38 and $33.97.

Brent downside expected

Brent also saw a strong move lower yesterday, with price breaking through the key $34.74 support level.

Despite a brief foray back up above that level this morning, we are now seeing another leg lower coming into play.

Much like US crude, we have an important support level ($34.16) which if broken would give even more confidence of this move lower. Support levels of note are $34.16, $33.23 and $32.23, with resistance at $34.74 and $36.10.

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