Technical analysis: key levels for gold and crude

Gold and crude markets remain somewhat sideways as markets attempt to decipher the next move within a wider downtrend.

Silver bars
Source: Bloomberg

Gold rallies towards top of range

Gold is seemingly trying to create a bottom over the past two months, with recent price action forming a new higher low and high. Certainly this is a bullish sign for the medium term but with recent experience showing significant volatility and choppiness, any gains are unlikely to last.

The key will be whether we can see a breakout above $1100, to escape from this pattern. However, for now a choppy grind higher seems likely, with $1081, $1089 and $1100 the key resistance levels.

To the downside, $1060 is the key, as a move below would mean the creation of a bearish view once more.

US crude rally comes under pressure

Yesterday saw a very choppy session, with the price swinging into and out of gains on multiple occasions. Ultimately, it ended up how many would expect, with US crude closing in the red.

Nonetheless, we continue to create new highs and higher lows which would have to be broken for the bearish view to return. With trendline support in play there is a chance that we could rally towards the $38.63 area.

However, should price see an hourly close below $36.91, then it would provide us with a bearish view, where support levels of $36.59 and $35.38 would come into play. 

Brent falls towards key support

It's a similar story for Brent, which has dropped back towards the crucial $37.02 support level. A close below this level would provide a more bearish picture and thus a rally is needed to pull this market away from the brink.

Overall, we have seen significant indecision within this market in recent weeks, with no clear direction. Thus there is less clarity over the direction apart from the long-term bear market in play.

For now, there is also a good chance of a rally back towards $39.00 as long as $37.02 has not been taken out. A close back below $37.02 would provide a more bearish view with $36.32 coming into play.

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