Technical analysis: key levels for gold and crude

Both crude and gold managed to break higher yesterday despite early gains fueled by the ECB. Will we see those gains extended?

Oil rig
Source: Bloomberg

Gold trendline holds once more

Yesterday’s blockbuster post-European Central Bank moves saw gold initially tumble back to trendline support, only to rally sharply to a new one-year high soon after. This brings back a renewed bullish sentiment and thus the current pullback seems likely to give way to further gains soon.

Notable support levels to watch would be $1263, $1260 and $1255. Thus while we could see further short-term losses, a move back towards yesterday’s high of $1284 seems likely soon.

Gold

US Crude rally continues

US Crude once more broke to a new high yesterday, despite initial ECB-fueled losses. The retracement we are currently seeing is likely to soon turn north for another move higher and thus it is worth watching for intraday bullish reversal signals.

Support levels of interest are at $39.46, $38.94 and $38.65. In particular the $38.94 level represents the peak from the beginning of 2016 and thus it would be expected to hold should price return to that level. The next major resistance level is at $42.00.

US crude

Brent in triangle formation

Once more, Brent cannot achieve what US Crude has, failing to not only set a new long-term high, but also failing to break the initial $41.35 resistance level.

This leaves us within a symmetrical triangle formation, where a closed hourly candle above $41.35 would provide a clear bullish breakout scenario. Conversely, a closed hourly candle below $39.82 would likely lead to a more protracted move lower, towards $39.00 support.

However, the outlook remains bullish given the trend coming in to this pattern and thus any move down towards the lower threshold of this pattern looks like a good entry for longs. 

Brent

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