Technical analysis: key levels for gold and crude

Crude rallies and gold comes off, yet could we be set to see the opposite occur as the two markets come back on trend?

Gold smelter
Source: Bloomberg


Gold has taken a less convincing shape today, as the fall below $1316 overnight negated the continued creation of higher highs and higher lows.

We look likely to have bottomed out on the real short-term and as such a move higher is expected for the beginning of today’s session. However, we will need to break back above $1327 to show that the rally is back on.

Gold price chart


Brent has rallied into yet another 76.4% retracement yesterday following a big US crude inventories drawdown. We remain within a potential topping pattern here, with lower highs being created. This holds unless we see an hourly close above $51.73, which would provide a more bullish outlook.

As such, it is worth looking out for intraday bearish reversal signals for as long as we remain below $51.73. The falling MACD histogram highlights the fact momentum appears to be on the wane, which could lead to another move lower, with $50.00 and $49.27 the next key support levels. 

Brent crude price chart


US crude has also seen a deep retracement, set within what looks like a clear downtrend over the past month. Price is currently only marginally above the 76.4% retracement, which provides a 3/1 risk-to-reward for a move back down to $46.00 rather than through $50.56.

We could be seeing a consolidation before another leg higher, yet we could be seeing a reversal lower. Thus watch out for shorter intraday charts to provide clues of the impending price action.

US crude price chart

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