Technical analysis: key levels for gold and crude

The recent divergent trends in gold and Brent look likely to continue, with gold breaking higher, while Brent sells off from Fibonacci resistance.

Gold rebounds from trendline support

Gold spent much of last week drifting lower, yet with the downturn yesterday came a fall into trendline and Fibonacci support. This has provided us with another leg higher for gold, with the price expected to push onwards from here.

Watch for sustained price action above $1233 for greater confidence that we are set to surge higher into another upward leg following this break.

Brent set for another leg lower

Brent managed to rally into the 61.8% retracement and 200-day simple moving average (SMA) resistance zone on Friday, with the price starting to turn lower since. This points towards a likely resumption of the recent downtrend for crude.

Fears that the Saudi government could restrict output to hurt the US in the event of an escalation of the recent crisis have largely been eradicated given comments from the energy minister. Hence, there is likely to be another round of selling coming into play following this recent retracement. As such, a bearish outlook remains in play unless we see a break through $81.61.

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.

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