Technical analysis: key levels for gold and crude

Dollar weakness provides a boost for commodities, yet with the OPEC meeting around the corner and gold having hit Fibonacci resistance, will we start to see both crude and gold come off?

Oil barrels
Source: Bloomberg

Gold rallies into Fibonacci resistance

Gold has seen an incredible reversal of fortunes, with the bullish outlook finally paying dividends following a bounce from the $1300-$1307 support zone. Interestingly, we have seen price rally into the 76.4% retracement and it currently turning lower.

Given the creation of lower highs on the wider perspective (the peaks utilised for the descending trendline) there is a chance we will see another move lower soon enough. The wider outlook remains bullish and as such, the breakout from this pattern would be expected to come to the upside.

For this to occur, we would need an hourly close above the $1357 and $1367 swing highs. Given the current overbought scenario and continued lower highs, there is a good chance we will see a move lower today. 

Brent choppiness undermines recovery

Brent has seen some significant choppiness following the period of strength derived by the latest comments (this time the Saudis and Russians). With the OPEC meeting fast approaching, volatility is likely to be high. For now, looking at the hourly chart, we have a clear lower high/lower low scenario, with price near the top-end of that spectrum.

With price above the 76.4% retracement, it makes sense to look for a short-term move lower, with a 3:1 plus risk-to-reward for a move back to $46.38. As such, an hourly close above $48.07 would negate this bearish short-term view.

Will WTI see another short-term low?

WTI has also set a new lower high and lower low on the shorter term, with price providing a deep retracement of yesterday’s downturn. Given the strength earlier in the week, there is a threat that we will come back into strength.

However, given the recent price action, it seems worth a punt to look out for a move back towards the $44.19 area given the strong risk-to-reward profile.

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