Technical analysis: key levels for gold and crude

Ahead of the OPEC meeting, will the gains in Crude seen in yesterday’s US session continue or is this a good selling opportunity?

Gold bar
Source: Bloomberg

Gold attempts to regain ground
Yesterday saw both new intraday higher highs and lower lows established, in a move which clearly added a degree of uncertainty to this recent move higher. Given the major downturn we have seen in gold over recent weeks, it seems more likely the current move is simply a retracement of the sell-off last week. Thus until we see an hourly close above $1224, it seems likely we will turn lower once more.

The 76.4% retracement seems a likely area of resistance for this to happen and thus $1218, alongside yesterday’s high of $1221 seem like import resistance levels to watch. Should we see an hourly close above $1224, then $1232 would be the next target. However, until that happens, a move back down to $1200 is the preferred option.

Brent breaks higher, yet trendline resistance awaits
Brent is moving higher this morning off the back of a heightened expectation that we will see some form of a production cap at today’s OPEC meeting. This remains unlikely to us and as such, there appears to be risks this rally will be undone should it reach no agreement.

However, given that many do not expect a deal, we could see a big spike should it occur. In either case, we are looking at a volatile day. Interestingly, Brent has broken back above the double-top neckline at $49.27 and is subsequently moving higher. We would need to see a break and close above $50.89 to negate the bearish connotations brought about by this week’s sell-off.

A break back below $49.48 should bring about a greater chance of this market turning lower once more. The existence of a trendline and the 76.4% retracements represents an important hurdle for this market to cross if it wants to continue these gains. 

US crude pulling back from Fibonacci level
WTI is also moving higher, but has come into the 76.4% retracement and seems to be selling off. Once more, there is a good chance we are seeing a retracement of the sell-off seen earlier in the week and as such, an hourly close above $50.25 would be required for the bullish view to come back into play.

A closed hourly candle below $48.90 should be sufficient to negate this current move higher.

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