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Technical analysis: key levels for gold and crude

Gold and Brent have been turning lower, with further downside looking likely. Could the break below Fibonacci support provide a bearish outlook going forward in gold?

IG Analyst

Publication date : 2018-06-21T09:45:41+0100

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Gold breaks below 76.4% retracement

Gold has continued its decline, with the overnight break below the 76.4% Fibonacci support level raising significant doubts over its ability to rebound out of this downtrend.

The wider picture for gold has been one of higher lows since the December 2015 low of $1046. This latest break below the deepest Fibonacci retracement level points towards a heightened possibility that we will break below the crucial $1236 level to bring a long/medium-term bearish view. For now, as long as the price remains below that $1267 mark, there is a heightened chance of further losses in line with the recent short-term downtrend.

Gold chart

Gold chart

Gold chart

Brent turning lower from Fibonacci and trendline resistance

Brent is declining off the back of a rally into the 61.8% retracement, which was accompanied by an interesting, if unorthodox, descending trendline.

This maintains the wider falling wedge formation. Tomorrow sees the Organisation of the Petroleum Exporting Countries (OPEC) decision on whether to raise production or not, bringing a great deal of news-based volatility. For now, we look likely to break lower towards the crucial $72.24 low, at which point we would need another break lower in order to complete the recent trend. A break above $75.43 would be required to negate this bearish outlook.

Brent chart

Brent chart

Brent chart

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