Technical analysis: key levels for gold and crude

Commodities have begun to weaken as a result of US dollar strength. However, with an overall uptrend in crude, could we see another leg higher in the coming days?

Source: Bloomberg

Gold breakout falters at the first hurdle

Last week’s bullish breakout in gold failed to stick, with the creation of a double-top subsequently driving prices back below the crucial $1284 level. That level represents the pivotal price to watch out for today, as we could easily see the current resurgence falter at this highly notable level.

Given this recent weakness, accompanied by the double-top pattern, further losses seem likely in the short-term. This view holds unless price breaks back through the $1287 level.  Support levels of note are $1280, $1273 (double top projection) and $1271. A closed hourly candle above $1287 would point towards a resurgence of the long-term bull trend, with $1300 and $1304 the next major resistance levels. 

US crude consolidates within recent downtrend

US crude has seen the recent rally hit the buffers, with the creation of lower highs and lows on an intraday basis. The four-hour chart clearly shows that we remain within an uptrend, with a four-hour close below $43.70 required for us to believe a wider sell-off is in play.

As such, another move higher is a distinct possibility, with $44.51and $45.43 the next important resistance levels on the way to $47.02. That being said, given that are seeing a gradual stepped move lower this week, we could see another short-term leg lower. An hourly close below $43.72 would be the indication that this could be in the offing. Ultimately, the uptrend remains in place and as such, the bullish medium-term outlook remains unless we break through $42.70. 

Brent continues to weaken

Brent has retraced to a greater extent than WTI, with the price currently below the 76.4% retracement. In a similar manner to US crude, a bullish view remains in play unless we see a four-hour close below the first major swing low ($44.18).

Until that happens, there is a good possibility we could begin to turn higher in the near future. Resistance levels of note are $45.23, $46.00 and $48.55, with support below $44.18 to be found at $42.87 and $40.57.

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