Technical analysis: key levels for gold and crude

Gold consolidation continues, in what looks like a pause before another leg higher. Meanwhile, Brent crude is showing some signs of weakness, yet this seems unlikely to last.

Gold smelter
Source: Bloomberg

Gold remains in triangle

Gold continues to trade within a symmetrical triangle formation, with price currently sitting around the middle of that pattern, finding support on the $1346 mark. Given the fact we are seeing this price return from the upper echelons of the pattern, a break below $1346 seems the most likely eventuality, for a move back into trendline support around $1342. However, an hourly close above $1353 would point towards another move towards the top end of the pattern,

Ultimately, we are awaiting a breakout from this wider triangle, which is expected to be bullish given the substantial rally seen so far in 2016. As such it pays to be long at the bottom of this pattern to play with both the current and long-term trend in play. 

Brent weakness looks like temporary retracement

Brent has broken below the overnight low of $50.83, with price now moving lower in what looks like a retracement of yesterday’s rally.

With that in mind, it makes sense to look for a potential long at the 76.4% retracement, which also coincides with the Wednesday night peak of $50.06.

The current bullish outlook remains in place unless price breaks below $49.66.

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