Technical analysis: key levels for gold and crude

Gold begins to show signs of a resurgence, in an attempt to regain the bullish mantra that has dominated the first-half of 2016. Meanwhile, crude selling intensifies as Brent breaks through trendline support.

Oil plant
Source: Bloomberg

Gold rally could signal start of resurgence
Gold has managed to gain ground this morning, following a failed attempt to break below last week’s $1310 low. That is the first piece of the jigsaw, with a break through $1334 providing the signal that this sell-off is likely to be over.

For now, we have both trendline and simple moving average (50-SMA) resistance to contend with. A bullish view remains in play, with initial signs pointing towards a recovery coming into play. This bullish outlook remains unless we see an hourly close below $1303.

Gold daily chart

Brent breakout looks set to continue
Yesterday’s rebound to $46.22 proved a fleeting move higher before the selling ramped up. Surprisingly, we saw a sharp deterioration through trendline support. Given that move, it is likely that we will see further downside to come.

As such, given the momentum evident in this market, it makes sense to simply play the trend based on the notion of lower highs and lower lows. Thus as long as price remains below the overnight high of $45.30, a bearish view is in play.

Brent daily chart

IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

This information/research prepared by IGA or IGA Group is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. In addition to the disclaimer above, the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

See important Research Disclaimer.