Technical analysis: key levels for gold and crude

Gold looks set for further downside after a break below key support within a period of consolidation. Meanwhile, Brent continues to consolidate following a breakout. 

Gold tracking trendline after decline below key support

Gold managed to break below the $1320 support level yesterday, providing greater confidence that we will return to the lower half of the multi-month range in place for gold.

For the time being, the price is tracking a descending trendline, which forms the lower boundary of a falling wedge pattern. This points towards a potential wider retracement coming into play before long. However, until we break above the $1326 level to signal the beginning of that retracement, another leg lower towards the crucial $1306 level looks likely before long.

Brent continues to consolidate after breakout

Brent remains in consolidation mode following on from its breakout into a three-year high last week. We are seeing the price falter around the same $74.26 level respected last Thursday, bringing about the potential for an intraday head and shoulders formation.

However, unless we see a break below $70.47, any such short-term downside would be seen as a buying opportunity. As such, it makes sense to look for long positions either on the breakout through $74.77 or at a Fibonacci within a retracement of the $70.47-$74.77 rally. 

IGA, may distribute information/research produced by its respective foreign marketing partners 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.