Technical analysis: key levels for gold and crude

Gold weakness continues despite a brief bounce on Friday. However, with a falling wedge in play, another move higher seems likely. Meanwhile, crude weakness is showing signs of abating, with Brent breaking through key resistance.

Gold bullion bars
Source: Bloomberg


Gold continues to trade within a falling wedge pattern, following a double top formation earlier this month. While we are seeing the market trend lower, a falling wedge is bullish in nature and as such, the next big move is expected to be to the upside.

Therefore, while we could see further losses, these are likely to be minimal, as the pattern reaches its apex. A bullish signal comes with a closed hourly candle above $1340.


Brent has been showing some signs of resurgent strength, with the failure to create a new low being followed by a trendline break. For the time being, we remain within a downtrend, yet a break back through $49.00 could undermine that.

Over the short-term, the question is whether the current weakness is simply a continuation pattern before we move higher towards the $49.00 mark. As such, there is not a major bias in play, with the potential for a wider rally towards the $49.74 mark possible as a continuation of the original triangle pattern.

For today, watch out for trendline and 50-simple moving average support (currently $47.52), with a move back below $47.00 needed to reinstate the bearish view.

US crude

US crude has similarly seen some weakness in early trade today, yet crucially we have not seen price break through trendline resistance. With the stochastic turning lower and the creation of lower highs still in play, it looks more likely we will sell-off than rally.

However, the failure to break lower once more last week could be a warning sign and thus the bearish outlook carries less conviction. Ultimately we would need an hourly close above $47.50 to negate this downtrend.

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.