Technical analysis: key levels for gold and crude

Gold takes a breather in its strong ascent this week. Meanwhile, crude continues to trade with a triangle formation.

Oil plant
Source: Bloomberg

Gold rally slows

The strong rally in gold has eased somewhat, with a pullback to $1360 looking like the potential backstop to this retracement. Ultimately, we remain within a clear uptrend and as such, the bullish view still holds.

A break and hourly close below $1360 would provide a more neutral bias, yet until that happens a move back to and through yesterday’s high of $1375 seems likely.

Brent rallies from key support level

Brent continues to trade within a descending triangle formation, with yesterday seeing the rally having sold into the triangle bottom. Given this trend, it seems likely that we will see another move higher to continue this pattern.

However, that bullish view is only short-term, with a closed hourly candle above $50.83 required to mark a bullish breakout. Of particular interest is the opportunity to short Brent once more around $50.00, which is a big psychological level, alongside the 76.4% retracement. However, until then, another leg higher seems likely today.

US crude triangle set to continue

US crude is also trading in what looks like a descending triangle formation, with yesterday’s rally coming from the mid-June low of $46.30. Given that clear rejection on the lower bounds of this pattern, a move into the upper threshold seems likely, with another leg higher seemingly on the cards.

However, much like Brent, we are looking for potential shorting opportunities around $48.86, which marks both the 76.4% retracement and November 2015 peak. As such, a short-term bullish view for a move into the $49.00 area is followed by a bearish view for a resumption of this triangle pattern. An hourly lose above $49.66 or below $46.00 would signify the breakout from this pattern.

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.