Technical analysis: key levels for gold and crude

Gold gradually grinds lower, as crude also taking a turn for the worst.

Oil pump
Source: Bloomberg

Gold turning lower once more

Gold looks to be declining once more, following a resurgence in early trading yesterday. The current sell-off is very gradual, with volatility on the wane. However, for now it seems likely we will continue this decline, back towards the $1225 region.

That said, we would need a break through $1137 to portray any sense of a resurgence. It is worthwhile noting the $1125 support level underpinning the past week of consolidation is a major long-term 76.4% Fibonacci retracement, bringing about the potential for this market to turn higher. But, for now, we have not seen those signs.

Brent wedge breakdown likely to continue

Brent crude sold off sharply yesterday following the creation of a bearish rising wedge pattern. Overnight price action has taken the form of a sideways consolidation, which looks likely to turn lower as a continuation of this short-term sell-off.

Crucially we would now need a break through $56.34 to point towards a bullish view once more. With yesterday’s break below $55.15, it looks likely the bearish emphasis could persist.

WTI turning into bearish mindset

WTI has also broken below a key swing low, with the push below the $52.56 mark pointing towards further losses. The sideways consolidation overnight has the potential to provide a tight stop loss for a break lower, with an hourly close below $52.38 providing a strong sell signal. We would need an hourly close above $53.82 to provide a renewed bullish picture.

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.