Technical analysis: key levels for gold and crude

Dollar strength pushes commodities lower across the board, yet will this downside last?

Oil rig
Source: Bloomberg

Gold crashes through key trendline
Yesterday saw gold break through a crucial support trendline, with a subsequent move lower passing through the key $1263 and $1257 support levels. While this is certainly not a good sign, it can also be seen as a retracement of the late April rally and thus the 61.8% and 76.4% pullbacks could be good areas for the buyers to come back in.

This is clearly an overextended move lower and as such, it does not seem worth chasing it lower, especially with a trendline support convergence around $1250. Thus while we have seen a big move lower, it seems more likely that we will see a bounce today than another move lower.

Thus be in the lookout for any intraday bullish reversal patterns for a retracement of yesterday’s losses. Key support levels are found at $1250 and $1245, with resistance at $1257 and $1263.

WTI builds on yesterday’s losses
The price is clearly rolling over on a short-term basis, despite the clear uptrend that has been in place this month. There is a good chance this is simply a retracement of the recent leg higher, starting from the 11 May low.

However, for now we are likely to see further losses for the short-term, with a break through $48.24 and $48.60 needed to negate this view. Key support levels of note are $47.50 and $47.00, where the latter could be a good place to get long again.

Brent breaks through key support level
The price broke through the key $48.83 level overnight, as dollar strength pushed commodities lower across the board. We are currently seeing some consolidation around the $48.32 support level and thus a closed hourly candle below this level would be a good signal of further downside.

The short-term looks likely to see further losses, with a closed candle below $47.00 needed to have longer-term implications. Key support levels are $48.32, $47.40 and $47.00, with resistance at $48.83 and $49.20.

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.