Technical analysis: key levels for gold and crude

Both gold and Brent are beginning to show signs of weakness, despite recent trends. 

Gold attempts to recover from overnight losses

Gold sold off sharply overnight, with the price hitting $1325 for the first time this week. The sharp nature of that decline has now given way to a period of consolidation, which looks likely to provide a short-term retracement towards the upside.

With that in mind, the downtrend remains intact, yet there is a strong chance of a move back to the upside, in order to retrace the $1340-1324 sell-off. That being said, this short-term bearish trend would only be negated with a break back above $1340. Until then, a short-term bounce would be seen as a precursor to further losses, and a fall back below $1324.

Brent begins to show signs of weakness from $70.00

Brent has struggled to clear the $70.00 handle this week, with the price turning lower after Monday’s attempt to break to the upside.

The key level to watch here is $68.40, where an hourly close below that level would complete a head and shoulders formation, providing a bearish outlook for Brent. With that in mind, watch for a break above $70.00 (bullish), or below $68.40 (bearish) to provide a directional bias for this market. 

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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