Technical analysis: key levels for gold and crude

Commodities bounce back after the dollar led downturn midweek. Is this the beginning of another move higher for gold and crude?

Source: Bloomberg

Gold rallies from key Fibonacci support

Yesterday saw gold break through a cluster of support trendlines, only to find support from the 76.4% Fibonacci retracement. The long lower wick indicates a possible bottom in place, an idea which will likely be tested today. As such, the ability to retain and build upon those gains will be crucial today.

The creation of a new higher low and closed hourly candle above the overnight high of $1259 would provide us with expectations of a strong move higher in the coming trading days. Much will also be down to the strength of the US dollar which has been negatively affecting this market over the past few days.

Look out for potential trendline support and the ability to break through $1259 as a strong bullish signal.

US crude heads for multi-month highs

US crude turned higher upon retracing 61.8% yesterday, with the $49.53 resistance level now standing in the way of creating a new seven-month high. Clearly the uptrend remains in play and thus a closed hourly candle above $49.53 would provide us with a strong buy signal for the day.

Alternately, a closed hourly candle below yesterday’s low of $47.25 would provide a more bearish outlook, with $46.16 the next important support level to the downside.

Brent rallies from 76.4% pullback

A similar situation for Brent saw a pullback to the 76.4% retracement and subsequent rally overnight. Again, the key is whether we can see an hourly close above $50.15 for a bullish continuation signal.

Alternately, a closed hourly candle below $47.72 would provide a more negative view, with $47.00 the next key support level.

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.