Technical analysis: key levels for gold and crude

Commodities are on the decline, with gold and crude selling off across the board. Will the sellers maintain control considering the recent uptrends across these markets?

Source: Bloomberg

Gold rallying back towards key resistance
Yesterday saw gold break through a cluster of support levels, with both an ascending and descending trendline converging around the $1240 level. We are seeing a rally back towards the overnight peak of $1238, yet given the weakness we have seen recently, another leg-lower seems more likely than a recovery for now.

As such, a short term bearish view holds unless we see an hourly close above $1240. Look out for $1235 (76.4% retracement) as a possible near term level that could limit the current upside. Support levels of note are $1225 and $1224 and $1212.

WTI shows weakness
Following on from Friday’s break below $39.11, WTI is showing clear signs of weakness. We have seen the creation of both lower highs and lows, which provides us with a bearish short-term view, where a rally would be seen as a retracement rather than anything more. This view holds unless we see an hourly close above $38.73. Support levels of note are at $37.50, $37.23 and $37.07.

Brent breaking lower
This morning has seen Brent break to a new 10-day low following on from a clear bearish turnaround for the market. We have seen price hit trendline support, which could provide a bounce for the session. However, the key is that we are seeing clear lows and lower highs being created here. Thus until we see a closed hourly close above $40.04, a bearish view is in play.

It is worthwhile watching for the lower descending trendline as possible support too (currently at $38.65). Until we break to a new high, any rallies are seen as opportunities for a better entry price to continue this recent move lower.

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.