Technical analysis: key levels for gold and crude

Crude continues to fall, as it approaches critical support levels which would change the medium-term outlook. Meanwhile, gold hits a convergence of support as it looks to rally once more.

Source: Bloomberg

Gold attempts to break through key support area

The commodity has been trading in a largely sideways manner over the past 48 hours, with yesterday’s temporary break through $1277.7 failing to hold.

This morning we are seeing another attempt to break through an important support level, with the 50-hour simple moving average (SMA), trendline and horizontal support at $1282.

This is an area where we could get some form of response and with that in mind, a bullish bounce is a strong possibility here. Ultimately, we would need to see an hourly close below $1276 to negate the current bullish view.

Brent bounce runs into Fibonacci resistance

The price has broken through the 76.4% retracement overnight, following a surprise rise in the IEA crude stock number yesterday. This brings us closer to the crucial $48.67 support level, which defines whether we remain within an uptrend on the medium-term for Brent.

It is clear that on the short-term, we have not negated the downtrend and thus further losses could be likely. However, given the medium-term bullish outlook, it makes sense that we watch out for short-term bullish reversal patterns as a possible signal that we are going to revert back to the uptrend. 

US crude pulls away from the brink

A very similar situation for WTI, which is attempting to claw back ground after a sharp move down towards the critical $47.94 support level. The hourly chart shows the clear downtrend of late, which has taken us back towards the swing low of $47.94.

This level would need to be broken for the medium-term uptrend to be negated. As such, watch out for a potential sign of reversal, which would come in the form of an hourly close above $49.04.

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