Technical analysis: key levels for gold and crude

Crude selloff continues apace as both Brent and US crude approach major support levels. Meanwhile, gold remains within a channel as it sells off to the lower end of the range.

Source: Bloomberg

Gold channel remains key
Yesterday’s rally in gold was short-lived, with volatility surrounding the FOMC announcement bringing price back up to the channel top before selling off once more. Thus, price remains within this pattern and is expected to return to the bottom of the range before long.

Price is currently being held up by the 50-hour simple moving average (SMA) and this consolidation is expected to give way to further losses, which would be signaled by a closed hourly candle below $1066.

Support levels of note are $1062 and $1058, whereas resistance levels are at $1067 and $1070.

US crude sells off once more
The selling has continued apace in US crude, with the break through $37.63 support key to yesterday’s trade. We have since seen a gradual drift lower, with little in the way of retracements.

The next key support level is $35.78, below which we would be looking at yet another six-year low. Below that, $33.55 is the 2009 low.

The bearish view remains unless we see an hourly close above $37.22 which would then look towards $37.63 and $37.86 resistance.

Brent falling wedge in play
Brent has been even more consistent with its losses than US crude, forming a falling wedge formation over the past 24 hours. A falling wedge is typically seen as a bullish pattern, which would point towards an upside breakout.

Given the selling in the market, we have not seen any bullish reversal signs yet, but with price approaching $36.74 support there is the possibility of a bounce.

Therefore the bearish view holds, where $36.74 seems the crucial support level, with an hourly close below pointing to further losses. Conversely, a bullish break through the top of the wedge could signal a short-term rally back towards $37.82.

IGA, may distribute information/research produced by its respective foreign marketing partners within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

This information/research prepared by IGA or IGA Group is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. In addition to the disclaimer above, the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

See important Research Disclaimer.