Technical analysis: key levels for gold and crude

Gold and oil both see a resurgence of sorts, yet with such a clear downtrend in play, there is a good chance the US dollar strength could yet push commodities lower once more. 

Oil plant
Source: Bloomberg

Gold within short-term channel

Gold has seen a retracement higher of sorts overnight following a strong selloff early into yesterday’s trading. While we have trendline support below current price, that is likely to be broken should price close below $1070. Thus the bearish outlook comes back into play below $1070.

However, until that happens we could see this short-term ascending channel continue to see gradual gains. Resistance levels are at $1075, $1077 and $1079. Meanwhile, a close below $1070 would look towards near term support levels of $1068, $1067 and $1064.

US Crude regains ground

US Crude has managed to break back above the $43.40 peak from yesterday morning, in a move which proves there could be some life left in this old dog yet.

Unfortunately this also highlights the difficulty in trading oil right now, because it is massively choppy and inconsistent. Nevertheless, the break back above $43.40 provides us with expectations that the current move lower will bottom out above $42.03 for another move back towards the $43.58 resistance.

For now, further downside retracement seems likely, with $43.03, $42.82 and $42.03 the next major support levels.

However, look out for bullish reversal signals (hammers, morning stars, bullish engulfing) for a clue that we could see price break back towards $43.25, $43.40 and $43.58 resistance. 

Brent is selling off

Unfortunately, Brent is not confirming US Crude, given that the rally late into yesterday’s session failed to break back above $46.77. With the momentum indicators both pointing towards further downside, it does seem likely that the weakness we have seen this morning looks set to continue.

However, this is where the Brent and US Crude outlook differs. Should price break and we see a closed candle below $45.31, this would point towards the bearish view dominating going forward. However, a reversal higher from above $45.31 would provide us with a clue that price could yet break through $46.61.

For now, further downside is expected, with trendline support (currently $45.79), $45.67 and $45.31 the next key support levels. Meanwhile, resistance levels to watch are at $46.39, $46.61 and $46.77.

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