Technical analysis: key levels for gold and crude

Gold begins to show signs of a resurgence, in an attempt to regain the bullish mantra that has dominated the first-half of 2016. Meanwhile, crude selling intensifies as Brent breaks through trendline support.

Oil plant
Source: Bloomberg

Gold rally could signal start of resurgence
Gold has managed to gain ground this morning, following a failed attempt to break below last week’s $1310 low. That is the first piece of the jigsaw, with a break through $1334 providing the signal that this sell-off is likely to be over.

For now, we have both trendline and simple moving average (50-SMA) resistance to contend with. A bullish view remains in play, with initial signs pointing towards a recovery coming into play. This bullish outlook remains unless we see an hourly close below $1303.

Brent breakout looks set to continue
Yesterday’s rebound to $46.22 proved a fleeting move higher before the selling ramped up. Surprisingly, we saw a sharp deterioration through trendline support. Given that move, it is likely that we will see further downside to come.

As such, given the momentum evident in this market, it makes sense to simply play the trend based on the notion of lower highs and lower lows. Thus as long as price remains below the overnight high of $45.30, a bearish view is in play.

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