Technical analysis: key levels for gold and crude

Gold and Brent begin to show signs of weakness from the 76.4% retracements. Will they reverse lower from here?

Gold rings
Source: Bloomberg

Gold weakening from Fibonacci resistance

Gold has shown some initial signs of weakness from the crucial 76.4% retracement this week, with yesterday’s rally into the $1274 mark being met by initial selling. The short-term picture has not yet shown any bearish reversal signals, but with the longer-term view highlighting the potential for a bearish reversal, it makes sense to be bearish unless we manage to break up through the $1296 mark.

Watch out for trendline and simple moving average (SMA) support to the downside, where a break below those levels and $1262 mark would provide a greater confidence of downside.

Brent begins to show signs of weakness

Brent sold off sharply yesterday, coming off the back of a rally into the 76.4% retracement. The wider trend is one of lower highs and lower lows, which would only be negated by a break up through $54.87.

As such, there is a risk this market turning lower once more in the near future. Yesterday’s selloff could be the beginning off that, or not. Watch out for the ability or inability to break back above $53.00 today as an indicator of where we are likely to move next. An inability to break above $53.00, followed by a break back below $50.90, would provide us with greater confidence of a protracted move lower. 

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