Technical analysis: key levels for gold and crude

Oil gets back into the groove, with both Brent and WTI breaking through key resistance levels. Meanwhile, gold sits on the sidelines, forming yet another triangle pattern as we await the breakout.

Gold bullion
Source: Bloomberg

Awaiting golden resurgence
Gold is trading within a triangle formation, as the creation of higher lows is negated by lower highs. However, the precursor to this was a failure to create new lows following the March sell-off, which provides a slightly bullish slant to proceedings.

Ultimately we will take our lead from a closed hourly candle above $1237 or below $1208 for a strong directional play. A closed hourly candle above $1237 is the preferred scenario, which would look for a return to the bullish sentiment that dominated January and February. This would subsequently look towards $1244, $1260, $1271 and $1284 as the next major resistance levels.

Conversely, a closed hourly candle below $1208 would look towards $1191 as the next major support.

US crude pullback unlikely to last
US crude has managed to pull itself out of the slump that has dominated the past three weeks, with the creation of both new highs and higher lows.

This morning has seen some early selling, yet it is worth noting we have seen this sell-off halted at both an inside trendline and 61.8% confluence of support. As such, there is a good chance we could see another leg higher coming into play, with the strong signal of that coming with a closed hourly candle above $38.93.

Should that occur, we would be looking towards $39.52 as the next key resistance level. This bullish view holds unless we see an hourly close below $38.12.

Brent weakness proves short-lived
Brent has also been rallying heavily since Tuesday’s low, with today’s early selling stopping short at the crucial February 2009 low of $39.82. Given the break through $38.97, it does look like we are back on a more bullish pathway for the time being. In particular, a closed hourly candle above $40.32 would point towards further gains with $40.86 the next key resistance level.

To the downside, a closed hourly candle below $39.58 would provide somewhat of a dampener on this short-term bullish outlook, where $38.97 is the next support level of note. 

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