Technical analysis: key levels for gold and crude

Gold weakness takes a breather, with a potential break lower pointing towards a key Fibonacci support level for bulls to come back in to. Meanwhile in crude, an overnight period of weakness looks likely to be over, with the uptrend likely to resume once more.

Source: Bloomberg

Gold consolidating after downturn
Gold sold-off sharply on Friday following the strong payrolls number. The break below $1349 pointed towards a wider deterioration, with the 76.4% retracement at $1324 of particular interest for longs to come back in once more.

However, for now we are seeing price consolidate with support and resistance clearly defined at $1330-1338. Given the substantial bearish implications of breaking below the cluster of support between $1303-1311, it seems likely that the bulls will come back into play once more before we get to that level.

As such, should we see an hourly close below $1330, it would look like a deeper retracement towards $1324 would be likely. However, whether that happens or not relies on the breakout from this range and as such, the outlook will be driven by a move from this period of consolidation. 

Gold daily chart

Brent pullback likely to spark next leg higher
Brent has pulled back sharply following substantial gains yesterday. Crucially for the short-term outlook, the ability to maintain price above $44.82 is key to continue on this recent uptrend. As such, the bullish outlook remains, with a more negative view taken should we see an hourly close below $44.82. Key resistance comes from yesterday’s high of $45.871 followed by $46.22.

Brent daily chart

WTI finding trendline support
WTI is also showing signs of strength, with trendline support providing the needed emphasis to push the market higher. We are clearly in a well-defined uptrend, with the tightening of price action meaning that a rising wedge is forming.

Ultimately, we would need to see an hourly close below $41.44 to negate this uptrend and given that distance, it will be difficult to pick out exactly where the bounce will come from.

For this reason, the trendline could provide that support level, yet it is not a guarantee. A push through the $43.40 mark could provide us with a bullish signal to say that this recent pullback is over. 

WTI chart

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