Technical analysis: key levels for gold and crude

Gold shows signs of a reversal, as we await the creation of a head and shoulders pattern. Meanwhile crude prices drift lower, in what seems like a precursor to another leg higher.

Gold smelter
Source: Bloomberg

Gold continues to hold up above key support

Gold has once more returned to a crucial trendline support this morning. In a clear potential topping pattern, we are awaiting confirmation of a head and shoulders pattern with a break and hourly close below $1276-1278 support zone.

Yesterday saw yet another retracement from this area, with the 76.4% pullback hit on the nose.

As such, it is worthwhile awaiting a break to confirm this bearish pattern. Until we see such a breakout, another retracement higher could be on the cards, with $1288 the nearest key resistance level.

Gold price chart

Brent looking to get back on trend

Brent retraced moderately in line with the pullback in stocks overnight. However, following an incredibly consistent rally which started on Friday, it seems likely we will be seeing further upside before long. An hourly close above $50.89 should provide sufficient clues that the rally is set to resume.

However, should this pullback continue, the $50.40 (76.4% retracement) level would be an interesting area for longs. Meanwhile, an hourly close below $50.19 would negate this bullish view.

Brent crude price chart

US crude retraces within short-term uptrend

US crude is similarly retracing this morning, following on from a substantial rally starting on Friday. The uptrend is expected to return soon enough, yet this current pullback is seen as a good thing as it provides a better opportunity to get into the rally.

A move back to $49.35 (76.4% retracement) would be particularly interesting for longs. However, a break and close below $49.14 would negate this bullish view.

US crude price chart

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