Technical analysis: key levels for gold and crude

The dollar resurgence brings a renewed selloff in commodities, but will it continue to send crude and gold to multi-year lows?

Mining truck
Source: Bloomberg

Gold selloff pauses

Friday saw an end to last week’s bounce from long-term trendline support. This selloff brings us closer to the $1064 low, which if broken could lead to significant losses. However, for now prices seem to be drifting higher, which looks like a brief respite in the selling.

Thus in line with the downtrend seen in both long-term and now short-term charts, it seems likely that this morning’s upside is a short-term phenomenon preceding another leg lower towards $1064.

Resistance levels to watch are at $1077 and $1079. The $1079 mark would need to be broken for a more bullish picture to emerge.

US Crude breaks triangle

This morning has seen US Crude break out of the symmetrical triangle from last week, providing a renewed bearish view going forward.

Given this breakout, any upside would be likely to find resistance around $41.09 or $41.38.

But ultimately, further downside is expected over the coming days with the August support level of $37.86 representing the only major support level within view.

Brent triangle still in play

Unlike US crude, Brent has not broken lower from the symmetrical triangle that was in play last week.

In fact, we saw a fakeout towards the upside, with price temporarily forming a new high. With price currently near the lower boundary of this triangle, there is a possibility that we could see price move higher. However, with US crude having already broken below the triangle, it is likely we will see Brent ultimately follow.

Thus it seems prudent to await a breakout, with a close below $43.26 the key signal as it would mean that both types of crude are confirming each other in the bearish view.

For now, support levels to watch are at $43.87, $43.49 and $43.26. To the upside, resistance levels of $44.93 and $45.23 are key.

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