Technical analysis: key levels for gold and crude

Gold and crude both reverse recent moves, with gold pulling back and crude rallying. However, while gold remains within an uptrend, crude appears to have turned, with a bullish view now in play.

Gold bullion
Source: Bloomberg

Bullish gold outlook remains despite pullback

Gold has seen a sharp pullback overnight, following a downside break from a symmetrical triangle formation. Price has not broken below the $1346 support level which means we remain within an uptrend. As such, another leg higher seems likely from current levels.

Given that price is currently around the 76.4% retracement, it makes more sense to be long for a move back to $1367 than below $1346 given the 3:1 risk to reward ration attainable. This bullish view would be negated should we see an hourly close below $1346.

Gold price chart

Brent breaks out of downtrend

Brent appears to have broken out of its downtrend, with price pushing through the crucial $43.22 level. Interestingly, the trendline break provided a good indication of this break. Essentially unless price moves back below $41.64, another leg higher seems likely.

As such, a bullish outlook is in play, with retracements down to the 61.8% ($42.43) or 76.4% ($42.13) providing bulls with an interesting entry area. 

Brent crude price chart

US crude breaks higher to confirm bullish bias

US crude has also broken through a key resistance level, $41.23, thus creating a new higher high. This means we have confirmation of the move across both Brent and WTI. As such, a bullish outlook is in play, with further gains likely.

The depth of this pullback is difficult to predict, yet either an hourly close above $41.74 or a move back into a key Fibonacci level (61.8% at $40.41 or 76.4% at $40.09) would provide a good area to get long. We would need to see an hourly close below $39.59 to negate this bullish view. 

US crude price 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.