Technical analysis: key levels for gold and crude

Oil sees brief respite from selling, while gold remains around a key support level as we watch for signs of the next move.

Gold bars stacked
Source: Bloomberg

Will gold bounce?

Gold has bounced from $1105 support despite a brief foray below this key level. The $1105 mark represents the September low and breakout point from the late July/early-August basing pattern. Thus a bounce is a possibility from this area. However, we have not seen any signal of a reversal as of yet, and thus the downtrend remains in play. A close back above $1111 would give confidence of a move higher, with resistance levels $1114 and $1122 key near-term levels. However, until we see that, the downtrend remains in play, with near-term support levels at $1105, $1103 and $1098.

US crude tracking SMA

The US light crude chart has clearly changed in sentiment since the break back below $48.02. The price is clearly finding resistance on the 50-period SMA (four hour), and this gradual retracement looks a lot like a bearish flag pattern. Ultimately, a break and close back below $45.68 would be the clearest signal of another leg lower. Should we see that happen, the next major support is at $45.43.

Brent consolidates after drop

Brent also sold off heavily this week, having closed back below $50.69 support. The bounce we are seeing comes off the $48.55 support level and has $49.01 resistance to contend with should the upside persist. With the MACD histogram and stochastic both turning upwards, there is a clear possibility of bullish momentum coming into play here, but given the flag in US crude, a breakout seems the safest bet. Thus a break back above $49.01 would point back towards $50.00 being key, whereas a break back below $48.55 would likely instigate further losses back down towards $47.70 support.

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