Technical analysis: key levels for gold and crude

Gold is somewhat serene, yet oil is at absolutely crucial levels with the potential for a bounce higher from major support in US crude.

Oil pipeways
Source: Bloomberg

Gold drops lower

Gold continues to grind lower, with the 20-period simple moving average providing clear near-term resistance. Given the clear downtrend in play throughout the past month, further downside seems likely, driven in large part by US dollar strength and December rate hike expectations.

However, the key to gold going forward is going to be the $1077 level, which if broken would create a new five-year low. For now, gold looks bearish unless price moves back above $1096, which would then look towards $1098 and $1105 resistance.

However, downside is expected following the doji candle this morning, with the July low of $1077 the next major support level.

US crude bounces from support

Yesterday saw another leg lower for Oil - US Crude, with price coming back to the crucial $43.58 support level (January low) and bouncing perfectly on the level.

The $42.03-$43.58 support zone has been the source of almost every major move higher over the past two-and-a-half months and with that in mind, there is a distinct possibility that we could see yet another strong move higher from here.

The creation of a new higher low followed by a move back above $44.24 would be a bullish indicator for a strong move higher, with $44.43, $45.03 and $45.58 the initial resistance levels in play.

We would need to see price close below $42.03 to point towards another strong move lower.

Brent below key support

Brent has managed to break back below $47.03 which is a major support level over the past two months. This is a bearish move and while price remains below $47.03, the chart will remain bearish.

Given the potential for a bounce in US crude, we would need to see Brent close back above $47.03 to see any bullish sentiment across both charts. We have seen a new higher low established and will await the response to $47.03.

A close above $47.03 would look for a bullish bounce with $47.62 and $48.33 as near-term resistance. A close back below $46.39 would look for a continuation lower, with $45.23 the next major downside level.

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