Technical analysis: key levels for gold and crude

Sharp sell-offs in both crude and gold seek to bring more bearish outlooks. However, gold now looks attractive at the current price, whereas crude awaits a triangle breakout for directional confirmation.

Worker inspecting oil barrels
Source: Bloomberg

Gold back down to major support zone

Gold tumbled below the crucial $1333 and $1330 support levels yesterday, after price fell out of an ascending triangle pattern. However, despite these losses, all is not lost for gold bulls, with price coming into a very interesting area of support.

The overnight lows almost touched trendline support, which also coincided with the 76.4% retracement drawn from the 28 June low of $1305. That low is in the midst of a major cluster of support levels which are unlikely to be broken with this current move lower.

With that in mind, this current area seems relatively cheap, with a move higher likely soon enough. As such, while we could see further short-term weakness given yesterday’s move, it makes more sense to be bullish for a move back towards the upper end of this wider symmetrical triangle.

Brent trading in triangle formation

Brent sold-off sharply yesterday, bringing price back down towards the crucial $48.82 support level. A break below that level would be a significant bearish signal, bringing $48.33 and $47.91 support levels into view.

Alternately, an hourly close above $50.53 would provide a renewed bullish view to continue the recent uptrend. 

Crude bounces from support

WTI is also trading within a triangle formation, with price having bounced from the crucial $46.64 support level yesterday. Once more the bias will be dictated by the breakout above $48.35 or below $46.64, with an hourly close providing the signal. 

The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication.